law no. (17) for the year 2010 concerning income taxes1 law no. (17) for the year 2010 concerning...
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Law No. (17) For the year 2010
concerning income taxes
In the name of the people:
President of the Republic:
In view of the Constitution of the Republic of Yemen.
After approval of the House of Representatives.
(We have issued the following law)
Section 1
Applied provisions
Part One
Nomination and definitions
Article (1): This law is called Income Tax Law.
Article (2): Definitions: The words and phrases wherever mentioned the
following meanings hereby assigned to them unless the context requires
another meaning:
Republic: The Republic of Yemen
Minister: The Minister of Finance.
Tax authority Chief: tax authority chairman
Authority: Tax authority (tax administration)
Law: Income Tax Act.
Executive Regulations: Regulations for this law.
Tax: a tax imposed in accordance with the provisions of this law.
Person: A natural person or legal entity and is one of the following legal
persons:
• Association of capitals: stock companies, and limited assets company
by and limited liability companies.
• Persons partnership, Corporation: joint liability (collective)
companies, companies limited partnership, and joint stock companies,
and corporate reality.
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• Cooperative, charitable societies and other associations subject to the
provisions of the law of societies and cooperative unions, as well as
clubs.
• State Bodies and the central and decentralized institutions, bodies of
the state, and public institutions, boards; mixed and other public
establishments.
• Banks, companies and foreign firms, even if its head office abroad and
its branches in Yemen.
-Court: The First-instance Tax Court.
-Taxpayer : A person who shall be subject to tax under this Act or one of
them, or who is binding on paying or deducting and remitting it to the
tax administration, and also includes a person exempted under this law
and investment law, or any other law.
- Foreign Taxpayer: the natural person other than Yemeni, whether
resident or non-resident.
-Establishment: entity, which is composed of a set of material and abstract
elements which is dedicated to engage in commercial or industrial
activities or service or real estate, professional or otherwise.
Related person: each person related to taxpayer, having a relationship
that affects in determining the tax base-----including:
A) Husband and wife, family roots, branches.
B) The capital association and the person who owns, directly or indirectly
at least 50% of the number or value of the shares or voting rights.
C) Partnership, public partners, acting and silent partners.
D) Any two or more companies whereby the person has at least 50% of the
number or value of the shares or voting rights in each of them.
Neutral price: the prevailing price in which two or more unrelated
persons are dealt , and that price is determined according to market
forces and circumstance deal.
Returns: they include the following:
1 - Interests and all amounts and financial values arising from:
-loans and credit facilities.
- Balances with banks.
-Bonds, and financing operations of different kinds.
-Profitability in Islamic banks.
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-Deposits and savings accounts at banks.
-Deposits and savings accounts in the mailboxes.
-Treasury bonds.
2 - Any gains resulting from:
Sale of financial investments held for trading.
Sale of financial investments held for maintenance.
3 - All amounts and financial values derived from any other sources, and
The regulations shall include the standards for determining those
sources, amounts and values of financial revenues arising wherefrom
as returns
-Royalties
-Payments of any kind for the use of or the right to :
- Usage: Such as rights of extraction, or copyright of pertaining to literary
or artistic or scientific work, including movies and any patent,
trademark, design or model, or a combination or mixture or secret
operation or for the use or rental of or right to use industrial ,
commercial or scientific equipment ; or information relating to
industrial, commercial or scientific expertise. .
-Mining activity:
It is in the activities of mining and quarrying, excavations, research and
exploration for metallic and non-metallic minerals and exploiting them
and the concerned commercial and industrial works.
-Natural reservoir: The sites in which metallic, industrial and
constructing materials are existed.
-Mines: Natural reservoirs from which the mineral materials are extracted,
that are existed down earth or in the surface.
- Quarries:. : Natural reservoirs from which the industrial, constructing
materials are extracted, that are existed earth's surface.
-Metallic minerals : Metals which lead to the extraction of a metallic or
more such as iron, copper, nickel, lead, zinc, aluminum and cobalt
when they are disconnected .
- Non- Metallic minerals: Minerals that are used industrially as is
primary, and can not derive metals such as: magnesium and sodium
wherefrom.
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Article (3): Residency: For the purposes of the application of this Law, the
residence of natural persons and legal persons is determined according
to the following:
First: The natural person is resident in the Republic in any of the
following cases:
1 - If he has a permanent place of residence in the Republic.
2 - Resident in the Republic for a period no less than one hundred and
Eighty-three days, whether continuously or frequently during twelve
Months which shall be terminated in that tax year, and that occurs only
In the absence of a permanent place of residence in the Republic.
3 - a Yemeni who worked outside Yemen and obtain career income of the
Republic.
Second: A legal person is considered a resident in the Republic in any
of the following cases:
1 - if it was established in accordance with the powerful laws of Yemen .
2 - If the head office or effective management is located in the Republic of
Yemen.
3 - If the legal person is a company in which the state or a legal persons
own more than 50% of the capital.
The executive regulations shall prescribe rules and curbs of permanent
residence to the legal person and its effective management center.
Third: Non-Resident: Any natural or legal person to which the resident
provisions are applied, these provisions are illustrated on the first and
second items of this article.
Article (4): permanent establishment: permanent establishment means any
fixed place for works through which the business are implemented ,
concerned on a non-resident in Yemen and they include the following:
A - A place of management.
B – Subsidiary.
C - The building which is used as an access point for sale.
D - The office.
E - The factory.
F - The workshop.
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G - Mine or oil field or gas well, a quarry or any other place for extraction
of natural resources including timber or other forest product.
H - A farm or plantation.
I - a building site or construction or assembly project or equipments and
activities' supervisory associated with any such thing. And the person
who works for a dependent project is considered as a permanent
establishment when that person has authority to conclude contracts held
for the project and accrediting them , unless its activities have been
confined on the purchase of goods or merchandise for the project.
J – The following is not considered a permanent establishment:
1 – Benefiting from special facilities for storage and display of goods and
commodities belonging to the enterprise only.
2 – Maintaining a stock of goods or merchandise belonging to the
enterprise for the purposes of storage or display.
3 – Maintaining a stock of goods or merchandise belonging to the
enterprise for the purpose of re-manufacturing them only by another
enterprise.
4 – Maintaining a fixed place of activity that directs only purchase goods
or merchandise or collects information for the project.
5 - Maintaining a fixed place of an activity that only precedes any work of
a preparatory or auxiliary character for the project.
6 - Maintain a fixed place of business where any set of the activities
referred to in the preceding items is carried out thereof, provided that
the overall activity of the fixed place of business bears a preparatory or
auxiliary character.
7 - Industrial or business works carried out by a foreign company through
a broker
Or general commission agent or any other agent of an independent
character, unless that broker or agent was proved of devoting most of
his time or effort for the benefit of the foreign company during the tax
period, and the prevalence of a non-resident company over another
resident one shall not mean that the resident company will be a
permanent establishment of the other.
Article (5): The income resulted from a source in the Republic includes:
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A) Income from services performed in the Republic, including salaries,
wages and other similar advantages and benefits.
B) Income paid by a resident employer of the Republic, even if the
business was carried abroad.
C) Income derived by an athletic ,or an artist out of their activity being
done in the Republic.
D) Income from business performed by non-resident through a
permanent establishment in the Republic.
E) Income from disposal of assets and movable assets belonging to a
permanent establishment in the Republic.
F) Income from leased properties or disposal of a real estate and likewise
which are located in the Republic.
G) The returns on the stocks of a company resident in the Republic.
H) Dividends paid by legal persons resident in the Republic.
I) the returns paid by the government or units of the local authority or
legal persons or any person resident in the Republic, and the return that
is paid from a permanent establishment which possesses headquarters
in the Republic, even if the owner is non-resident in the Republic.
J) The amount of rents and license fees and royalties paid by a resident in
the Republic or to be paid from a permanent establishment with
headquarters in the Republic, and if the owner is resident in the
Republic.
K) Income from any other activity being done in the Republic.
Article (6): foreign tax: A tax paid outside the Republic by a legal person
who is resident in the Republic, that tax is based on his income
resulting from foreign sources, and the legal resident person Republic
is capable of deducting foreign tax, which he actually paid outside the
scope of the Republic from the tax which is imposed on him, and
covered within its (tax) base under the provisions of this law taking
into account the observance of the following:
A) The discount shall not exceed the amount of payable tax under this law
with respect to income from foreign sources, which could be paid in
the Republic on that income.
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B) Reported losses outside the Republic may not deducted in any way
from the Republic tax base .
C) the taxpayer (legal person), that calls for foreign tax deduction under
the provisions of this Article shall prove that he is taxable to foreign
tax , its imposition principles, specifically the amount of foreign paid
tax , an evidence of that , including payment documents and the
foundations of imposing such a tax shall be brought by the taxpayer .
Article (7): tax year: A fiscal year beginning on the first of January, ending on
(31) of December of each year, or fiscal overlapping year, of twelve
months which would be considered as a basis for tax assessment,.
However, the tax may be assessed for a period of less or more than
twelve months as follows:
A) The tax is allowed to be assessed in a period of less than twelve
months in the following cases:
1 – The first commercial phase of the establishment , either expired at the
end of the year or at any other date that could be taken by the
establishment to the end of its fiscal year.
2 - Cases of breakdown or waiver , death or bankruptcy, which is before
the end of the fiscal year.
3 – Establishment that set out maintaining regular accounts during the
financial year, in this case , there must be independent determination
of the taxable income of the first fiscal year to the date of maintenance
of accounts
4 - If the establishment has amended the end of its fiscal year, so that
closed off its accounts before the date following the date of closing the
accounts of the previous financial year through an application
submitted by the taxpayer listing the reasons for the amendment.
B) The tax can be assessed for a period that exceeds twelve months in the
when certain establishments are obliged to close off their accounts for
more than a year and not extend for more than eighteen months due
to cessation stoppage or waiver or Bankruptcy or any other legal reason
that is indicated by an evidence .
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Part II
The scope of taxation on income
Article (8): the scope of taxation: income tax contained in this Act is
imposed on :
A – Incomes of resident legal persons, whether the source of this income
within the Republic or abroad.
B – the obtained incomes of natural persons resident within the
Republic.
C - the incomes of natural persons residents and non-residents from an
external source on the work or services performed in the Republic.
D - the income of persons not resident "natural or legal persons" obtained
within the Republic.
Types of taxes on income
Chapter I
The tax on commercial and industrial profits
Section I
The Tax
Article (9): the tax apply annually on all income derived from business and
industry, service and all the following profits and incomes :
A - the profits earned of the operation or operations carried out by
brokers or commission agents (even if confined to one deal only), and
generally any profit earned by any individual or establishment engage
in mediation to buy or sell any type of goods, services or financial
values and all the movables, or to purchase or sell real estate or
businesses spaces.
B - earnings of persons who buy freelance all movable or immovable
property to lease or sell them to others for profit purpose, as well as
the profits of people whose profession is to lease these properties
(movable or immovable) and rent them back to the others ,and that
includes the profits of people who are renting the property equipped
with furniture for commercial , household or industrial purposes with
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the provision of tools, and all or some of the abstract elements necessary
for operating the property according to the nature of the activity.
C - profits of concessionary companies of all kinds, whether residents or
non-resident, as well as profits of partnership companies and capital
associations, whatever their purpose , whether engaged in commercial ,
industrial, financial or real estate activities.
D - Earnings derived from the those engaged in the construction or
purchase of real estate freelance for selling them as a way of profession
, whether that profit is resulted from selling the whole real estate or
divided into apartments , rooms, or administrative units or
commercial or otherwise.
E - Earnings resulting from the construction and contracting.
F - Capital gains including those arising from the sale of the establishment
or any of its assets , shares . Or transferring its ownership or altered it
by ways other than inheritance, both during or at the end of the activity.
The income may be generated by ownership transfer of shares or
stocks , establishment or assets from the owner to another person or
when liquidating that establishment , or merging it with other legal
person.
G – profits gained from the damages(compensation) award, including
what is obtained from the evacuation of the establishment or its
warehouse .
H - profits of any contract which shall be achieved or completely
achieved in the Republic, either that contract is a contracting ,
provisional or bidding one ; also contract of commission agencies ,
registration agreements , as well as contract of commercial mediation ,
and the like source of funding, whether inside or outside the Republic.
I - profits of natural resident persons' profits obtained from within the
Republic.
J - legal resident persons' profits earned from inside or outside the
Republic .
K - profits of non-residents arising from offering a service or
undertaking any single activity ,profession or deal in the Republic,
without prejudice to the agreements ' double taxation avoidance' ,
where the Republic is a party thereof.
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L - profits of economic units of both public, mixed sectors and its
belonging units when engaged in activity subjected to the tax
provisions determined under this law within the limits of this activity.
M – The holding amounts from the sale, lease or granting the concession
of using , exploiting any trademark or design or patent . rights of
authorship ,publishing or copyright , and in accordance with the laws
in force.
N – income arising from the sale or transfer of ownership of any legal
person ; and also liquidating or merger it with another legal person.
O - Income derived from insurance and reinsurance of various kinds, as
well as income derived from the business of the land , sea and air
transport including the incomes earned from shipping and
discharging, filling packaging and the related work.
P – The incomes of establishments , public companies operating in the
aspects of oil , gas and other minerals.
Q - income derived from the contestations and the like.
R - income from financing and operating leases .
S - returns earned ,outside the Republic , by any legal person licensed
under the laws of Yemen.
T - interests and commissions, including interests , deductions and
exchange premium and commissions obtained by the financial ,
money-exchange companies and money changers, companies of
insurance , brokerage and banking in return to offering services to its
customers , without prejudice to the provisions of paragraph (f) of
Article (21) of this Law.
U – Exchange Rate Premium.
V- Incomes and profits of companies operating in the field of
communications and information technology.
X - Both profits or incomes which are non-exempted derived from any
other source and not covered in paragraphs (a) to (v) of this Article ,
and not subject to another income tax under this law.
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Section II
Income subject to tax
Article (10): Net Profit:
the commercial and industrial profits subject to tax profits are based on
the revenues resulting from all commercial and industrial operations
and services of all kinds, which are undertaken by the taxpayer ,
including other compensations and revenues obtained by him , as well
as the profits resulting from the liquidation made during the tax year,
with deducting costs which are due discount from them in accordance
with the provisions of this law, and net profit is determined on the basis
of the income statement prepared in accordance with accounting
standards adopted in the Republic taking into account that the tax base
shall be determined in accordance with the provisions of this law.
Article (11): The related persons :
if the related persons presented provisions in their financial ,
commercial transactions differ from those that occur between non-
related persons such provision which intend to reducing the tax base
or move the burden of a taxable person to another exempted person or
not subject to, the authority shall determine the taxable profit on the
basis of neutral price The Executive Regulations shall determine the
methods of neutral price .
Article (12): long-term contracts:
A) the tax base is determined in the long-term contracts on the basis of
percentage of what has been accomplished in each decade during the
fiscal year, and determine the percentage of what has been accomplished
in each contract on the basis of the actual cost of the work carried out until
the end of fiscal year attributed to the total estimated cost of the contract.
B) The estimated profit is determined to contract by subtracting its estimated
cost from its value and as well as the estimated profit for the contract
during each fiscal year with a ratio of the estimated profit in accordance
with the preceding paragraph .Such ratio shall equalize the rate to what
has been implemented during the fiscal year and that can occur if contract
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profit should be settled at the end of the tax year in which the execution of
the contract h has already been terminated on the basis of its actual
income deducting actual costs after deducting the previously estimated
profits.
C) If tax year account was closed in loss during which execution of contract
concluded in loss, this loss is deducted from the preceding tax period or
periods during which the specified contract was executed therein ;
provided that deduction shall not exceed contract profits during that the
period and the tax account should be recalculated on that basis and the
additional amount shall be retrieved by the taxpayer .
D) If the loss arising from execution of the contract has exceeded the limits
referred to in the preceding paragraph, the remained losses shall be
carried forward to following years in accordance with Article (19) of this
Law, provided that the losses carrying forward shall not exceed five
years, and Executive Regulations shall determine the rules for calculating
net profit or losses on long-term contracts.
E) a long-term contract means: contract of manufacturing, processing or
construction or the performance of related services, which the
establishment implemented them for third-party as particular value
and its implementation lasts for more than one tax period.
Article (13): deductible expenditures:
A) the net taxable profit is determined in the basis of the total profits
subtracting, thereof, all costs and expenditures necessary to achieve
and maintain those profits. The deductible costs and expenses shall
bear the provisions as follows:
1 - to be engaged in commercial or industrial activity or service and
should not be separated from that activity.
2 - to be real and approved by documents, except the costs and expenses
that, as usual, do not require documents to support its being associated
with that activity, so as not to exceed 2% of net profit in accordance
with the principles prescribed by the Regulations.
B) There shall be considered as due deductable costs and expenses
demonstrated as follows:
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1 - the lease value of properties leased by the taxpayer for exercising its
various activities with the exception of the lease value under financial
leasing contracts.
2 - Depreciation in accordance with the provisions of Article s (16.17) of
this Act.
3 - taxes paid by establishment under the provisions of this Act, except
for tax of commercial and industrial profits .
4 - Offering Charity of Trade and Industry paid by the taxpayer and in
accordance with the law of alms (ZAKAT).
5 - donations and subsidies paid to the domestic , social associations and
institutions which is registered with the competent authority , which
have their headquarter in Republic and provided that their value shall
not exceed 5% (five percent) of net profit. There shall all be considered
as costs regardless , the donations paid for the construction of
mosques, shelters or the Government or the Yemeni army, or for schools
and hospitals, dams, public roads, drinking water projects, as well as
donations and subsidies for of the charitable or humanitarian purposes
recognized by the government .>>>>>>>>
6 - Insurance premiums contracted with local insurance companies on the
assets of an enterprise as well as related activities, and the workers and
staff of the facility.
7 - Salaries and wages and the like, treatment expenses paid to employees,
payments by the employer to his employees of the General
Organization for Social Insurance, and its contribution to any pension
fund or savings or any other fund established by the employer in
accordance with the laws in force in return for a reward of separation or
other funds established for the social solidarity and health.
8 - travel expenses related to the activity facility.
9 - losses to prove what happens on the activity in charge of the theft or
misappropriation of or damage if proved its seriousness and because
there is nothing to really equivalent.
10 - Foreign exchange differences.
11 - royalties and commissions paid on loans held with third parties in
order to work not contrary to the provisions of Article (15) of this Act.
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12 - The branch share of the expenses of the main center who is outside the
Republic, provided they do not include those expenditures any salary
for work performed in Yemen, or dividends, or royalties, and that only
allows downloaded about 2% (two percent) of the taxable profits
achieved in the Republic.
13 - What is happening by the heads and members of boards of directors
of the membership rewards and allowances.
14 - Staff training expenses established in accordance with the terms
contained in the Regulations.
15 - impairment charges related to the facility.
C) 1 - that the taxpayer is employing workers or staff entering
employment (permanent positions) for the first time from the date of
this law; to claim an additional deduction is calculated as follows:
50% of the salaries of these workers or employees for the first year of
employment.
40% of the salaries of these workers or employees for the second year of
employment.
30% of the salaries of these workers or employees for the third year of
employment.
20% of the salaries of these workers or employees for the fourth year of
employment.
10% of the salaries of these workers or employees for the fifth year of
employment.
And should not result in the loss of any additional charge tax.
2 - meaning the employee or worker in the application of the provisions of
this paragraph of this Article , any natural person associated with the
facility as a user has, whether by contract or resolution of appointment,
not less hours of work by binding a week for 35 hours.
3 - to acquire the right to claim additional deduction in accordance with
clause (1) of this paragraph requires the following:
have assigned books and accounts.
to charge tax returns monthly salaries and wages and the supply of tax
due on the dates of specific legal accompanied by the detection of new
workers or employees who terminated their service with the attached
labor contracts.
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4 - No deduction may be claimed contained the additional item (1) of this
paragraph of the following cases:
- for the operation or employ workers or staff are not included in the
records of insurance and pensions.
- for the operation or employ workers or employees of non-Yemeni.
Recruitment of foreign companies operating in the oil and gas
contractors and subcontractors, as well as employment in enterprises
and companies operating in mining and subject to the provisions of
Section IV of Part 3 of book 1 of this Law.
Article (14): non-deductible expenditure: There shall not be cost on the
profit as follows:
A) Amounts earned by establishments or companies from their profits to
make the allocation of different types to cover potential losses with the
exception of:
1 – Technical reserves , allocations which are created , as an adherence ,
by insurance companies in compliance with the provisions set in the
Law of the supervision and control over insurance, in accordance with
procedures prescribed by the Executive Regulation.
2 - bank allocations against bad debts constituted in accordance with the
Regulations and instructions issued by the Central Bank.
B) capital returns that may be calculated by the individual taxpayer
against his capital ,or the wage allocated for himself for his job in the
establishment , as well as the benefits of capital, salaries and benefits of
current credit account in the establishment calculated by the partners in
the private companies , limited partnership , such benefits which are
not subjected to tax of salaries , wages .
C) The owner withdrawals from the facility, whether in cash or in kind.
D) proceeds of loans and debts of all kinds paid to natural persons not
subject to tax or exempt from them.
E) any amounts to be paid to shareholders, including dividends and are
distributed dividends.
F) The proceeds of loans made by the general partners of the company.
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Article (15) non-deductible returns: revenues and commissions on loans
contracted with third parties in accordance with item (11) of paragraph
(b) of Article (13) of this Act ,such returns shall be deductible , and not
exceeding the other returns , commissions, which shall have been paid
if the funding did not exceed 70% of the loans and 30 % of the capital ,
with the need to restricting the right of deductions as follows:
A - The discount shall be based on of interest or the actual paid
commission
B - in the case of finding a loan of the taxpayer from any party that such
deduction should not be more than loan interest calculated at the
international rates prevailing at the date of the loan payment which
shall not exceed 4%, in addition to the bid average of the Central Bank
of Yemen on the date of payment of the loan, and apply the provisions
of this Article shall apply to the a legal person, with the exception of
banks and insurance companies.
Article (16): calculation of depreciation:
First: For the purposes of applying the provisions of this law, regardless
of what is contained in any other law, the calculation of depreciation of
the assets of the facility when determining taxable profit on the basis
that is depreciated by the owner of the assets or in the event that the
original lessor and under a finance lease is registered with the
competent authority that is depreciated by the lessee is required to
deduct depreciation by the lessee the following conditions:
A) inclusion of the financial leasing contract for the purchase option or
transfer of ownership of the asset to the lessee.
B) Consider the present value of lease payments on the contract is the cost
of the leased asset for the lessee.
C) to be leased asset in the possession of the original tenant and using it in
accordance with it too.
D) that does not include the lease the following:
1 - the lease the lessee's subcontractors.
2 - sub-lease under which the lessor the transfer of asset to another
tenant.
3 - the lease for the resource, called the sale and leaseback, under which
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the supplier to sell the asset to the lessor and the supplier then hired by
the lessor and the supplier is a tenant.
E) not be less than the term of the lease for three years.
Second: Depreciation is calculated on the facility as follows:
A) 5% of the cost of purchase, create or develop, renovate or rebuild any of
the buildings and facilities, ships and aircraft and for each tax year.
B) 10% of the cost of purchase, develop or improve or renew any of the
intangible assets that are purchased, including the fame and for each tax
year.
C) the following categories of assets are depreciated according to a system
based on depreciation rates mentioned against each category as follows:
1- computers and storage devices, information systems, programs and
data storage devices by 50% depreciation of the basis for the tax period.
2 - All other assets increased by 25% depreciation of the basis for the tax
period.
D) does not calculate any depreciation of land and works of art and
souvenirs, jewelry and other assets of non-expendable nature.
Third:
A - deducting 40% of the cost of the assets used expendable, whether
such assets, new or used, the first taxable year during which the use of
those assets is calculated depreciation in accordance with item II of this
Article is about that period of time after the deduction of 40% of the
specific under this paragraph of this item, in all cases must be
committed in charge to keep books and accounts.
B – shall not apply to 40% discount provided for in paragraph (a) of this
section in the Article on the assets used by enterprises and companies
operating in the fields of oil, gas and other minerals (mining).
Article (17): the basis for depreciation:
A) means the basis for depreciation in the application of the provisions
of Article (16) of this Law, the historical cost of the asset, on the basis of
straight-line method to be adopted and the basis for calculating
depreciation and falls within the historical cost of all capital expenditure
incurred for the renewal of origin or development.
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B) The executive regulation shall specify the principles and rules of
calculation of depreciation.
Article (18): Bad Debt:
A) set off against the bad debt charge by excluding it from the books and
accounts of the facility, which has been non-existent and the
impossibility of collecting the documents and documents of the certified
Auditors, with the availability of the following conditions:
1 - have established accounts regularly.
2 - that religion is linked to an active business.
3 - have been previously included the corresponding amount of debt in the
accounts established.
4 - to be established has taken serious measures to collect the debt, and
could not be collected within two years from the date of maturity.
B) for the large taxpayer is emphasized in the report of the chartered
accountant s, which he approved a tax declaration on the availability of
the conditions set out in paragraph (a) of this Article .
C) does not allow download of bad debt that resulted from loans and
facilities companies, banks and financial institutions for members of
boards of management or shareholders.
D) must be under the amounts received for installation in all cases of bad
debt referred to in this Article when you collect the debt in full or in
part in the same year in which the collection of such amounts.
Article (19): Transfer of losses:
A) If the seal expense of one year subject to the tax loss of any charge
provided adoption tax, approved by a Chartered Accountant licensed
based on the books and accounts in accordance with the provisions of this
law, the loss is within the expenses of the year following the year of loss
and is deducted from the profits, if not enough profit to cover the loss of
the entire transfer the rest to the next year and so on until the fifth year of
the beginning of the opponent, shall not in any way transfer the remainder
of that loss to the year following the fifth year.
B) does not apply to the provision of paragraph (a) of this Article on the
losses incurred by the company's fiscal year and prior years, if there is a
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change in the ownership of capital by 100%.
Article (20): re-evaluation of assets:
A) shall not apply to taxes on profits from the revaluation of assets of
individual when presented as a share to contribute in-kind match in the
capital contribution, provided that:
1 - is the introduction of the value of assets in their accounts in the
history of contributing to book value for the purposes of calculating the
tax.
2 - The shares corresponding to the nominal share in kind.
3 - It should not be disposed of through sale during the three years
following the fiscal year that contribute to it.
B) In the case of changing the legal form of legal person or more, not
included in the profit and loss account - capital gains or losses resulting
from the re-assessment provided proof of assets and liabilities at
nominal value is time to change the legal form, for the purposes of
calculating the tax, and depreciation is calculated on assets and transfer
allocations and reserves in accordance with the established rules before
you make this change.
C) is a change of legal form, especially the following:
1 - the integration of two or more resident companies.
2 - the division of a resident company into two resident companies or
more.
3 - shift or change in legal entity of the legal person.
4 - separation and liquidation.
5 - purchase or acquisition of 50% or more of the shares or voting rights,
either in number or value in a resident company in exchange for shares
in the company procuring or acquisition.
6 - purchase or acquisition of 50% or more of the assets and liabilities of a
resident company from another resident company in exchange for
shares in the company or procuring obsession .
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Section III
Tax Exemption
Article (21): exemptions: The following incomes are exempted from tax as
follows:
A) income of private associations and institutions pertaining to charitable
purposes and organizations of civil non-profit society, whose financial,
material resources acquired from donations, grants and subsidies, and
any other returns resulted from developing those resources, and for
achieving the exemption the following conditions are required as
follows :
1 – Those exemptions shall be licensed and valid in accordance with the
law that regulates them.
2 - Such associations and institutions shall be committed to their activities
of charitable tasks only.
In the case of providing services in return for a fee, that fee must be
slight , and the authority has the right to assess the tax when it becomes
clear that the Assembly is engaged in commercial activity.
B) income from land invested in agriculture, horticulture, traditional fishing
and farming (livestock, poultry and bees), traditional or reforestation
including the conversion of their products in a manner simple manual
labor.
C) To engage resulting from the export of industrial and agricultural
products and crafts, and the Executive Regulations shall determine the
rules and procedures to do so.
D) distributions of dividends or shares received by legal persons for their
contributions to other legal persons, provided that such profits for the
shares or quotas had been paid by the tax, commercial and industrial
profits before distribution if such persons exempt from tax.
E) the benefits of treasury bills when paid to individuals resident.
F) income of natural persons of the proceeds for their deposits in banks,
banks, mailboxes, and their income from their shares and their shares of
companies of various legal entities.
21
Section IV
Provisions for the tax on mining activity
The first section
The scope of the tax
Article (22): The Tax application Covered:
A - Without prejudice to the provisions of this law, the provisions of this
section shall apply to the activities of mining and quarrying, mining,
research and exploration and exploitation of metallic and non-metallic
and the associated trade and industry activities, except with respect to
oil and gas.
B - as not provided for in this section, the provisions and rules and
procedures covered by this law shall apply to the taxpayer of mining
activities described in paragraph (a) of this Article .
Article (23) the Tax Covered:
A)The annual tax shall apply to all incomes derived from business and the
activities described in paragraph (a) of Article (22) of this Act, whether
these incomes were earned by a natural or legal person, the income
derived from such actions and activities shall not have in any way the
exemptions set out the law of investment, including investment projects,
large-scale mining projects .
B) tax of commercial and industrial profits is charged to the taxable
mining activity in accordance with the provisions of paragraph (b) of
Article (63) of this Law.
C) The amounts paid to third parties or for a non-resident are subject to
tax in accordance with the provisions of Article (71) of this Act.
Article (24): This includes coverage of tax:
A) earnings of persons resulting from the activities of the mining and
quarrying, excavations, research and exploration, and exploitation of
metallic and non-metallic and associated activities of commercial,
industrial, and separately from other activities of the taxpayer.
B) earnings of persons of the invested capital or the equivalent
(150.000.000) one hundred and fifty million dollars and more in a single
22
investment project, so that each project is the tax base independently
and separately from the other even if they were the same owner
Section II
Income subject to tax
Article (25): determining the profits:
The profits of mining activities on the basis of revenue resulting from all
excavations, research and exploration and exploitation of minerals both
metallic and non metallic and the associated commercial and industrial
activities carried out by the taxpayer or has been achieved during the
tax year, including profits of liquidation made during the year after
deducting all costs deductible is the determination of net profit is
determined on the basis of the income statement prepared in accordance
with GAAP (Generally Accepted Accounting Principles), the tax base
would be determined in accordance with the provisions of this law.
Article (26): the expenses of mining: The calculation of the taxable net profits
, in accordance with the provisions contained in paragraphs (a), (b) of
Article (13) and Articles (14.15, 18) of this Law relating to deduction of
the costs required to produce , and maintain profit, in addition to this:
A) Royalties imposed by law on the exercise of mining activity which are
paid to the Government and private parties ,such royalties that arise
from the exploration of this activity.
B) the fees and rents paid to others and the cost of transport services,
including fees paid to the Government with the exception of the rental
value under financial leasing contracts.
C) The expenses of marketing minerals and mineral products, not to
exceed 2% of the value of sales of those minerals and mineral products.
D) the cost of prospecting and exploration for minerals: It may be treated
in accordance with any of the following options:
treated as an expense in the year in which or the accumulation of and
depreciate the fixed premium basis by 20% to start the discount of the
year in which the first sale of metals resulting from prospecting or
exploration by the taxpayer from a mine or quarry, provided that the
23
costs of prospecting and exploration deductible associated with permit
or license granted by law to taxpayer to do so.
E) Depreciation in accordance with the provisions contained in sections I
and II of Article (16) and the provisions of Article (17) of this Act with
the exception of the depreciation rates set out in the second clause of
Article (16)as the following:
1 - The depreciation of drilling equipment, mining and rocks, and are
calculation on the basis of fixed premium method by 20%, beginning
with the discount of the year has started to use the equipment and
determine the Regulations of equipments that are depreciable as
equipments of exploration, mining and rocks extraction.
2- The pre-production cost including the development of the mine or
quarry site, the feasibility , marketing study, and the costs of
environmental study, which is made before the commencement of sales
of minerals that have a depreciations on a straight line ( fixed
premium) basis by 20%, that the deduction shall commence from the
year during which first sale of minerals by the taxpayer of the mine or
quarry which is related to such costs. The executive Regulations shall
specify the costs of which are eligible to be pre-production costs.
F) Cash mounts at the time when deposited in a special account and was
approved by the concerned governmental body for the purpose of
environmental protection for the mine or quarry site at a later time
provided that such cash deposit shall be final and non-refundable.
G) the costs of environmental protection and rehabilitation not covered by
the provisions of paragraph (f) of this Article .
H) Donations, contributions in accordance with the provisions of
paragraph (5) of paragraph (b) of Article (13) of the Law to include
grants and assistance to communities affected by the work of the mining
and extraction of rocks.
I) Exploration costs associated with the extension of mining project who is
at least equivalent to the investment value of (150.000.000) one hundred
and fifty million dollars which is considered as cost of a project for
exploitation, even when the excavation costs were not connected to
area of granted land to the project of mineral exploitation.
24
Section III
Stabilization of the tax system
Article (27): Convention on the tax stabilization:
A) When a taxpayer invests in an investment project for metal equivalent
(150.000.000) one hundred and fifty million dollars and more during the
first five years of the project, he voluntarily submit a request to the
Minister of Finance to enter into agreement of tax stabilization , the
Minister with the participation of Minister of Petroleum and Minerals
shall conclude agreement with tax standard stabilization with taxpayer
to ensure the stability of the tax system on the project for a period of the
first ten years, from the first year of production and sales in this project.
B) Convention on tax stabilization must specify rates and prices for each of
the profit tax, commercial, industrial and general sales tax, customs
duties, royalties, and any taxes or other fees covered by the Convention
in accordance with the rates and prices set forth in the relevant laws at
the conclusion of the Convention standard for the stabilization of
taxation.
C) the Regulations define the elements and the Framework Convention of
tax stabilization, according to the following criteria:
1 – The availability of taxpayer's request for joining the Convention
stabilization tax.
2 - Obligation to stabilize the tax system under the applicable concerned
laws on time of the agreement conclusion.
3 – The correspondence of the terms of the tax stabilization treaty with the
provisions of the tax ,custom law and applicable mining law at the
conclusion of the agreement.
4 – Identifying and exempting the taxpayer of any changes during the
agreement period in the value of income tax or general sales tax or
customs duties or royalties, or any taxes or other fees on the basis of
their calculation stability in accordance with the applicable laws at the
date of conclusion of the Convention.
25
5 - The Convention sets out the subjected tax and customs duties, royalties
and other fees imposed on the taxpayer in accordance with the relevant
laws entering into force at the time of the agreement conclusion .
6 – the taxpayer right to export and sell his products by international
market prices.
7 – A commitment made for the sake of the taxpayer the right to receive
and dispose of foreign currency income arising from those sales.
8 - in case of taxpayer's failure of investing as much as (150.000.000) one
hundred and fifty million U.S. dollars in the first five years of the
project, the Convention on the tax stabilization would be legally invalid.
9 - Signature on the Convention by the two sides that the first side is
government represented by Minister of Finance, Minister of Petroleum
and Minerals ;and the taxpayer who requested to join the tax
stabilization agreement on the other.
D) The taxpayer who joins the Convention on the tax stabilization in
accordance with the provisions of paragraphs (a, b, c) of this Article
must pay annually (two per cent "2%") from the tax base of commercial
and industrial profits for income tax accounts in return for the tax
stabilization .In addition to other taxes due on that taxpayer, including
income tax and other fees and royalties, according to the Convention of
the stabilization system of calculated tax .
E) After completing the procedures to sign an agreement to stabilize the
standard tax by the ministers of finance and oil, Tax authority and the
Customs authority and the Central Bank and the relevant authorities
shall be informed to the implementation in accordance with the terms
and conditions of the Convention.
Article (28): the exception to the stabilization system: not part of the
stabilization of the tax shown to Article (27) of the Act: tax salary, wages
and tax revenue real estate tax on the transfer of ownership of the
property; also does not apply to this installation provisions and
procedural rules relating to delays in the collection, appeals and
penalties The statutory deadlines for the payment of tax and annual and
monthly returns, and apply in this regard the provisions of the tax laws
26
and relevant laws in force at the time the emergence of legal entitlement.
Section IV
Declarations of the mining activity Taxpayers
Article (29): Each taxpayer of exercising the activities of mining and quarrying,
mining, research and exploration or exploitation of minerals metallic
and non-metallic and the associated trade and industry activities during
the fiscal year shall submit his tax declaration on the legal time of an
annual tax in accordance with the provisions set forth in this law.
Article (30):Declaration Attachments: Without prejudice to the provisions of
the tax declarations contained in this Act, all costly exercise of mining
activity to recognize and attach to acknowledge the tax evidence on the
of the figures used in the calculation of prices and costs, discounts and
commissions, with copies of contracts for the sale and purchase or
financing .
Article (31): Regular Accounts: Without prejudice to the provisions of Article
(32) of this Act; each taxpayer exercise of mining activity that is
committed to holding regular accounts, so that the tab for all revenue
and costs related to active mining and associated activities of
commercial, industrial, in accordance with regulations accounting and
disclosure for income tax purposes.
Article (32): Investing in mining more than 150 million dollars: A taxpayer
who intends to establish one investment project equivalent (150.000.000)
one hundred and fifty million dollars and more, to commit to holding
regular accounts, and establishes a separate entity is a tabulation of
incomes and cost subject to tax in this project and submit a tax
declaration for the investment project independently, regardless of any
mining projects and other relevant subsidiary.
27
Section 5
Rules and tax treatment of
small enterprise and the smallest enterprises
Article (33):
A - The rules and procedures contained in this section on the activities of
the taxable small and taxable smaller entities subject to tax commercial
and industrial profits tax and non-commercial professions and non-
industrial tax and salaries and wages in accordance with the provisions
of this law.
B - The provisions and rules contained in this section assigned do not
apply to non-resident branches and agencies of foreign companies and
commercial homes.
C - as not provided for in this section apply to the taxable activities of
small and the smallest-rules, provisions and procedures covered by this
law.
The first section
Small enterprises
Article (34): definition: small enterprises in the application of the provisions
of this law, all taxpayer that natural or legal person, an increasing
number of its annual (gross value of annual sales or total annual income
(1.500.000) million five hundred thousand riyals and not exceeding
(20.000.000 ) 20 million riyals, or at least the number of workers have on
the four workers and not more than nine workers, and in each case, the
lesson in the category of such facilities and installations based on giving
priority to the small and the smallest enterprises standard turnover,
taking into account the inflation rate was amended by the Central Bank
Article (35): determining of the tax base:
A) is selected and the tax base (net profit) for the small enterprises
taxpayers in the taxation of business profits, industrial and tax net
income for the professions of non-commercial and non-industrial by a
28
percentage of turnover by type of activity, as follows:
10% of the total value of commercial and industrial activities or the total
value of construction works.
20% of the total value of sales (revenue or income) for the activities of
the service and professionalism.
5% of the total value of sales of basic foodstuffs (wheat, flour, rice,
sugar), provided that it is not importers.
B) the tax due is calculated from the reality of the tax base determined
under the provisions of paragraph (a) of this article in accordance with
sections and categories of tax specified in Article (62) of this law,
including the taxable small enterprises of natural and legal persons.
C) issue a classification of business activities and service and professional
decision of the Minister of finance on the presentation of the tax
authority chairman
Article (36): the books and records:
On the taxable small enterprises bookkeeping and records in accordance
with accepted accounting practices in general, and accounting records
are documented sufficient income to determine the sales activity for tax
purposes.
Article (37): statements:
Committed small enterprises taxpayers to provide tax declarations
annually to the tax authority or one of its subsidiaries and the payment
of tax from the reality of the tax declaration and no later than 30 the of
April of each year for the previous tax year and must submit the
declaration on the prescribed form of the tax authority for this purpose
including the following:
A) the total value of sales or revenues or the total value of contracts
executed during the tax year based on the books and records that
taxpayer is committed holding.
B) determine the tax base and in accordance with the principles set out
paragraph (a) of Article (35) of this Law.
C) calculation and determination of the tax due in accordance with
paragraph (b) of Article (35) of this Act.
29
and the tax authority accept the tax declaration submitted on
responsibility of the taxpayer.
Article (38): tax assessment
assessment tax on the small enterprises taxpayers according to one of
the following cases:
A - from the reality of the taxpayer declaration.
B - by estimate: in if the taxpayer did not submit his tax declaration the tax
authority has right to estimate the tax, according to the following:
1 - Determination of turnover (total value of sales or revenue for the fiscal
year) of the taxpayer in the light of data and information available to it
and includes the Regulations indicators and the foundations of
appreciation.
2 - Determining the tax base in accordance with the provisions of
paragraph (a) of Article (35) of this Act.
3 - Calculation and determination of the tax due in accordance with the
provisions of paragraph (b) of Article (35) of this Act.
4 - The taxpayer has a right to object to the estimates of tax administration
in accordance with the provisions of this law.
Article (39):
A - the taxpayers of small establishments shall submit tax declaration and
identification tax base in accordance with the provisions of Article (10)
or article (45) of this law based on the books and records under Article
(86) of this Law, provided that the recognition in the legal schedule on
the form prepared for this purpose with a list of interest income, interest
and accept the recognition of the responsibility of the taxpayer and must
pay the tax due from the reality of recognition at the same time to
provide.
B – In order for applying the provisions of paragraph (a) of this article, the
taxpayer shall attach with the declaration a request to the tax
administration shows its desire for the transfer and assessment of tax on
that taxpayer based on the income statement and in accordance with the
general rules in this law, and affirms its commitment to continue
settling accounts under a period of not less than three consecutive years.
30
Article (40)salaries and wages tax:
A)The owners of small establishments have to deduct from income of their
employees and employers the amount of entitled tax according to this
act, and they have to pay the tax by a declaration to the authority, or to
one of its branches ,central bank, to any authorized bank every three
months during the first ten days of the fourth month for three past
months and on the prepared form by the authority for this purpose.
B)The authority accepts submitted declarations according to the provisions
of paragraph (A)of this article and the responsibility of the taxpayer.
C) In case of absence of submitting tax declarations of salaries and wages
tax according to provisions of paragraph (a) of this Article , the
Authority can assess the tax by evaluation in the light of available data
according to the provisions of this act .
Article (41) A grace period of holding penalties books :
The taxpayers of small establishments are permitted for a grace period of
Five years from the date of executing this Law , and from being
subjected to imposed fines in accordance with provisions of paragraph
(a) of the Article (140) of this Law .
Section 2
Smaller Establishments
Article (42) Definitions :
To be intend the smallest establishments in the application of provisions
of this Law , all natural taxpayers have not to exceed their annual
business number ( the total value of annual sales or revenues ) for
million five hundred thousand (YR 1,500,000). And not exceeding the
number of his employees for three workers , taking into account the
provisions of Article (34) of this Law .
31
Article (43) : The limit of Exemption :
To be considered smaller establishments which there annual businesses
number not exceeding (YR 1,500,000) Million and five hundred
thousands YR , and less, out the scope of submission to tax of
commercial and industrial profits and the imposed tax of non-
commercial and non-industrial professions according to provisions of
this Law .
Chapter 2
Net tax income for non-commercial and non-industrial professions
Section 1
The tax application
Article (44) Professional Income : The tax applies to
1) Net income of subjected non-commercial and non-industrial professions
which are practiced by the taxpayer in independent way and be a core
component of work , if these revenue had been achieved by practicing
work in the Republic.
2) Received incomes by the owners of intellectual property rights through
the sale or use of those rights
3) Other incomes derived from any profession or activities are subject to
commercial and industrial profits .
Section 2
Subject Incomes
Article (45) Net Income :
To be determined, the subject tax incomes annually on the basis of actual
revenues during the tax year, including revenues from non-commercial
and non-industrial professions and returns of professional
fundamentals or relinquishment in whole or in part from practicing the
profession , and any amount resulting from the closure and determines
net revenues base on received returns from various processes in
32
accordance with this Law after the deduction of all costs and expenses
for practicing the profession .
Article (46) Deduction of expenses :
In order to achieve net income from non-commercial and non-industrial
professions and is calculated by deducting all costs and expenses
necessary to practice the profession or activity in accordance with the
provisions of this act .
Article (47) Forwarding of losses
The taxpayers of non-commercial and non-industrial profession who are
holding regular records and accounts have the right to forward the
losses in accordance with the provisions of Article (19) of this Law .
Chapter 3
Tax of salaries and the like
Section 1
Incomes Subjected to Tax
Article (48) Tax Application :
Tax applies to salaries , wages and other similar features and benefits of
cash and in kind as follows:
a) all amounts paid to the officer or employee resulting from his work by a
contract or non-contract , whatever names , images or reasons for these
payments come from the Republic , with the exception of what is
excluded under this Law .
b) What is worth of the taxpayer or employee from a foreign source for
the works performed in the Republic .
c) The salaries, emoluments and allowance granted to the heads and
member of boards of the directors in public sector units and mixed non-
shareholders .
d) The salaries and emoluments of the heads and members of boards ,
directors and managers of capital companies .
Article (49) Excluded from Incomes subject to tax are as follows :
33
a) The amounts assessed to the premium pension under the approved
laws and regulations .
b) Compensations to be granted for the burdens and expenses for the post
or representation allowance, appearance, hospitality , or travel and
move .
In general , all compensations granted to employees for expenses and
charges necessitated by the requirement of official service or task within
the limits of performance ratios and standards prescribed by the
regulations .
Section 2
Tax Exemption
Article (50) Exemption from the tax :
a)Earnings that are received by the ambassadors and consuls of foreign
countries represented in the Republic and members of the consular and
political corps and their foreign stuff with the condition of reciprocity .
The exception covers only income from the work on the practice of their
jobs referred to above.
b) incomes received by individuals of non-Yemenis for performance of
their official duties to the international organizations established under
international public law , and incomes received by staff members of
non-Yemenis, governmental and non-governmental organizations
under the agreements concluded with the Yemeni government , in
return for services of relief to Yemen .
c) Compensation to accidents and work injuries , including allocations for
the life that had to be paid to ensure that accidents and work injuries or
their dependents after death , in accordance with the rules and
regulations .
d) Retirement pensions and termination benefits .
e) Compensations or allowances paid for the workload and medical aid
and financial helps granted according to the medical report issued by
the competent authorities and accredited with documents .
f) Income of the daily wage laborers in various sectors under the standards
and principles established by the regulations .
34
Chapter 4
The tax concerning proceeds of properties
Section 1
Tax Application
Article (51) the scope of tax application .:
a) The tax shall be applied annually to build proceeds of properties
and prefabricated , and movable buildings and space lands leased
for various purposes .
b) The taxpayer of this tax is the owner of the property or who has the
right to use the property leased from the state and the legal
representative of the taxpayer is obligated to pay the tax on behave
of the representative .
Section 2
Taxable Incomes
Article (52) Property proceeds :
Property proceeds is the sum of annual rental of leased properties for
various purposes .
Article (53) Lease amount :
a) The actual income of the properties shall be specified under according
to correct lease contract. In case of the lack of knowledge of the property
proceeds or the proof of the invalidity of lease , Tax Authority has the
right to estimate in accordance with the principles set forth in the
regulations .
b) The net property proceeds subject to tax shall be determined to the sum
of annual income according to provisions of paragraph (a) of this Article
for natural persons .
c) To be taken into account in determining annual net property proceeds
subject to tax for legal persons to introduce the income of legal taxpayer
from property proceeds within tax base , commercial and industrial
profits , and the taxpayer has the right to deduct the necessary expenses
associated with achieving this income in accordance with the
provisions of this Law.
35
Section 3
Exemption of the tax
Article (54) The following are exempt from tax:
a) Real estate used by its owners for one purpose
b) Real estate that the government owns . This does not include real
estate belonging to the public and semi-public sectors , as the
executive regulations define.
c) Free of charge of real estate appropriated for hospitals health ,
centers and educational , governmental centers and free educational
charitable and health establishments according to the conditions the
executive regulations define .
d) Free of charge real estate appropriated for orphanages and old folks
homes .
e) Real estate owned by the Ministry of Endowment , and real estate
endorsed for charitable agency or public corporation, clubs and
youth sport establishments in accordance with the conditions the
executive regulations define .
f) Real estate owned by diplomatic corps , consulates and
international organizations , provided they are subject to reciprocal
stipulations .
Article (55) The termination of tax liability :
Buildings that are to be demolished or burnt , and in particular those that
are uninhabitable for any reason and do not generate any income , are not
taxable .
36
Part IV
Tax on the transfer of Property ownership
Chapter I
Taxation
Article (56): The taxation .
A - tax on the full value resulting from the transfer of real estate
ownership shall be imposed under the provisions of this law including
all the occupied space lands, and real estate or prepared for building,
both included the disposition or sale of the property in whole or in part,
whether the disposition or sale was compensation or otherwise .
B - a single tax applied only for transactions in buying and selling real
estate and land-based sale of profitability (Murabaha) and rental (Ijara)
ownership and participation.
Article (57): responsible for payment of tax:
A) The burden of paying tax on the seller or real estate and be disposed of
or disposed of by the buyer or the transaction took place or transfer of
ownership documentation for him jointly liable to pay tax.
B) shall not in any way to document or register any transfer of ownership
of property by the competent authority were not the property transfer
tax imposed by this law have been fully paid.
C) There are many tax multiplicity of actions in the real estate one.
Chapter 2
Application Of the Tax
Article (58): Tax coverage:
The tax imposed under the applicable provisions of Article (56) of this
law shall apply to :
A) The amounts resulting from the transfer of ownership of the real estate
property through sale or disposal of underdeveloped land and
37
constructed or under constructed lands of real estate , both a sale or
disposal include the property in whole or in part, whether the sale or
disposal is paid in cash (as compensation ) otherwise including the
transfer of real estate ownership in accordance with funded lease
contracts.
B) the value agreed upon in the contract (agreement or deed or bond)
whenever the value has not been determined , the tax authority has the
right to estimate that value based on price , time and place .
Article (59): Request of Tax Settlement Document :
Documents that prove the settlement of tax must be presented
according to following procedures :
A) Registration and enrolment of the transactions of the sale or disposal
or the transfer of taxable real estate ownership by the competent parties.
B) Obtaining a construction license from the pertinent authorities .
c) Accrediting and authenticating any contract, agreement or deed of real
state ownership by the competent authorities , including the judicial
authorities.
Article (60): information from the competent authorities:
the competent authorities must furnish the tax authority with a monthly
statement of the sale or disposal documents for the constructed or under
construction real estate (lands) , under developed lands which were
done according to their records – And that forwarded monthly
statement must set out the name of seller or purchaser , and disposition
agent and their address , that statement will also show area , location
and price and date of sale .
38
Chapter III
Tax Exemption
Article (61): Dispositions are tax -exempted as follows:
A) Transfer of property by inheritance or will .
B) Grants offered to the a religious, charitable or educational.
institutions.
C) Grants offered to health , sports establishments in accordance with the
provisions prescribed by the executive regulations.
D) The disposal of lands , real estate of the public endowments.
E) the disposal or sale of the agricultural land whenever the bond of the
sale is accredited from the pertinent authorities based on what the
executive regulation determines .
F) The disposal of state-owned lands , real state which have been
transferred to a government .
Part 5
Tax rates
Article (62): The tax rate of a natural resident person:
The income- tax collectible on taxable annual earnings of taxpayers from
commercial and industrial , non-commercial , non-industrial
professions and or , wages and salaries and the like is collected at the
following rates:
The first YR 120.000 exempt per year
The next YR 120.000 10%
The next YR 600.000 15%
and what exceeded YR 840.000 : 20%
Article (63): The tax rate for the legal and natural non-resident person :
A) tax due on the income subjected to the tax of commercial and
industrial earnings and tax of non-commercial , non-industrial
professions is collected at the average of 20% (twenty percent) without
deducting exemption limit of the incomes of natural non-resident and
39
legal persons except those subject to the provisions of paragraphs (b), (c
), (d), (e) (f) of this Article , as well as small establishments covered by
the provisions of Article (62) of this law.
B) Without prejudice to the provisions of the agreements concerned on
granting of the concession and participating treaties on production with
Yemeni Government , such agreement ,whose constitutional procedures
are completed, is ratified by law . tax due on the income subjected to
the tax of commercial and industrial earnings is collected at the rate of
35 % without deducting the annual exemption limit of the incomes
from companies working in the field of oil and gas mining and other
minerals profits of firms holding all types of privileges or( concession )
both resident and non-resident.
C) tax due on the income subjected to the tax of commercial and
industrial earnings is collected at the rate that exceeds 35 % without
deducting the exemption limit of the incomes from establishments
subjected to that tax under agreements or contracts concluded with the
Yemeni government , that shall be applied to the maximum tax which
is specified within an agreement or contract .
D) Tax due on the income subjected to the tax of commercial and
industrial earnings is collected at the rate of 50 % without deducting the
exemption limit of the incomes pertained to phone-services operators
which refers to mobile phone telecommunications operators
(companies) regardless the quality of the technology and system which
used by the operator to provide the telecommunication service ,whether
it bears the system name of the GSM or CDMA or any other used
systems or alternatives , or those which would be used in the republic .
E) Tax due on the income subjected to the tax of commercial and
industrial earnings is collected at the rate of 35 % without deducting the
exemption limit of the incomes derived from natural persons , activities
as follows:
1 - international telecommunications services
2 - production and importation of cigars and cigarettes of various species
and nomenclature.
F) The tax on salaries , wages and the like on natural non-resident
person is collected at the rate 20% ( twenty percent ) .
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Article (64): The tax rate for enterprises and investment projects
Notwithstanding the provisions of Article (62.63) of this law, the tax on
income subject to the tax of commercial and industrial profits is
collected at rate of 15% (fifteen percent) without deducting the
exemption limit of the income of enterprises or investment projects,
according to the following conditions:
1 - the capital of the investor shall be as much as Three Million U.S.
Dollars ,and the number of the essential laborers working for the
establishment is not the least a hundred workers.
2 - the establishment or enterprise shall be committed to holding up
regular accounts , and committed to presenting the tax declaration
accredited by a chartered accountant in accordance with the provisions of
this law.
3 - The enterprise licensed by the competent authorities should keep on
its investment activities , so the benefit of provisions in this Article
would be relevant to enterprise , establishment for keeping up with the
same activity.
4 - The establishment or enterprise should settle regularly, the tax of
salaries and wages imposed on all their laborers under monthly
statements in accordance with the provisions set forth in this law.
B) The taxable investment projects shall be determined at rate of 15%
specifically in the following the projects, sectors, and activities:
1 - The basic infrastructure projects in energy, electric power, pure water,
sanitation and roads.
2 - Transport Projects in land, sea and air.
3 – The healthy development projects, and hospitals.
4 - projects of producing computer software , systems .
5 - projects of hotels and tourist cities and places of entertainment for
children.
6 – The projects of industrial development ; and agricultural producing
enterprises , with the exception of projects and sectors and activities
referred to in paragraph (c) of this Article .
B) The tax rate mentioned in paragraph (a) of this Article which is at ratio
of 15% (fifteen percent) shall not apply to any of the projects or sectors
41
or activities that are not listed or nominated within the projects
confined to paragraph (b) of this Article , mentioned bellow are
exceptions not taxable as for the mentioned percentage :
1. The enterprises operating in the field of oil, gas and mining activity.
2. Projects which are carried out under special agreements concluded with
the Yemeni government, including concession-granted companies of all
forms that are resident and non-resident.
3. public and mixed sectors.
4. manufacturing of weapons and explosive materials.
5. The industries of cigarettes and tobacco and the other which causes
damage to the environment and health.
6. Financial institutions, establishments and exchange business or banking
in their entire various references and all financial , exchange services
and the relevant therewith ;and insurance services.
7. The trade of import and wholesale and retail.
8. telecommunications services.
Article (65): tax rate for salaries and wages:
A) Progressive taxes of salary and wages and the like shall have a
maximum rate of 15% for the resident taxpayer.
B) If the taxpayer is subject to several direct specific taxes according to this
law , they shall only benefit from one annual exemption.
C) The annual exemption of the natural resident and non-resident persons
amounts to ( 120,000) one hundred twenty Thousand Yemeni Rails
which is deducted from the taxable earnings, if the tax assessment
period is less than (12) Months .
Article (66): Tax rate on Other Taxpayers Incomes
Notwithstanding the provisions of Article (65) of this law, the tax on
other income , allowances obtained by the taxpayers who are subjected
to tax of salaries and wages (employee or worker)is collected at the rate
of 15% without a deducting the exemption limit. That shall include
taxable bonuses and allowances in various forms which comprise
rewards, bonuses which are granted to heads and members
42
representing boards of directors, and incentive pays and meeting
allowances, commissions and money grants. That also shall be in return
for overtime work and the fees and the like, Wherever, provisions of this
Article hall apply to the taxable allowances ,amounts other than the
monthly salary of a full and comprehensive legal allowances .
Article (67): The tax on salaries and wages accompanying the taxpayer's
income :
a monthly gross net income of taxpayers subjected to tax of salaries and
wages shall be taxable at the ratio of 1/12 of the outlined brackets in
Article (62) of this law.
Article (68): Commission and brokerage:
A) For each payment for accidental commission or brokerage, the tax is
charged at 10%, such percentage would be subtracted from the amount
owed to the commission beneficiary; and the brokerage, commission-
obtained person has right to deduct an amount cut-off from the tax due
on him when settling accounts for the tax period in which deduction has
been occurred .
B) The payer of commission or brokering shall remit the amount
deducted to tax administration within fifteen days.
Article (69): Tax Rate on Real Estate Returns :
The tax on real estate returns of natural persons shall be collected by
one-month-lease per year.
Article (70): Tax Rate of Real State Transfer:
The rate of real state transfer is collected at 1% (one percent) of the total
value or price of the property.
Article (71): The deducted tax of the source:
A - amounts paid by the owners of individual establishment and legal
persons resident as well as any non-resident person has a permanent
establishment in the Republic, for external party or any non-resident
person, such amounts are taxable at the rate of 10% without deduction of
any costs, the mentioned amounts are limited to the following:
43
1 - Returns.
2 – interests of foreign loans with the exception of interests on loans
granted by international financial institutions or external accredited
foreign banks.
3 - Royalties.
4 – For services of all kinds, such amounts are not considered for the
services of the following:
- Share of a permanent establishment operating in the Republic of the
expenses of the main center which is outside the Republic.
- Transport or freight.
- Shipping.
- Insurance on imported merchandise.
- Participation in exhibitions and conferences.
- Registration on international markets.
5 - For the carriage or use of the technology or the benefit rights from
licensing the use of technology.
6 - for sports activity or the artist, whether was paid directly to him or by
any party.
7 – The benefit rights from trademark licenses.
8 - The benefit rights from patent licenses.
9 - The benefit rights from artistry knowledge.
10 - The benefit rights from management knowledge and other services
which are performed in the Republic.
B – The exemptions from tax provided in paragraph (a) of this Article
would be: loan interests, lines of credit which are collected by the
government and local authorities from external
C - establishments, resident and non-resident persons which are referred
to in paragraph (a) of this Article are committed to deduct, seize amount
of tax due, carry out the following
1 – Preparing a statement showing the amount of the paid and deducted
cash, and informing within a copy of this statement to both the authority
and the person whose cash was deducted .
44
2 – remitting the due deducted tax to the authority treasury or its
account in the central bank, its branches or competent tax administration
treasury under the provisions within fifteen days of deduction date.
Part II
Procedural Provisions
Part One
Registration and Identification
Chapter I
Identifying the taxpayers
Article (72): Starting activity:
Every taxpayers or party ,practicing a commercial, industrial or
technical activity , is subject to tax, identified under the provisions of this
law, must submit to the tax authority a notification within thirty (30)
days from the date of commencement of his work activity . If the
taxpayers is a company, its manager, or its managing director who is a
member of the board of directors, or any person in charge, is responsible
to circulate the notification . That person in charge shall submit the
mentioned notification whenever a new branch or an office of a
representative agent is established. as well as when there is a transfer of
the headquarters from one place to another..,.. The executive regulations
of this law will define the details that should be shown in notification and
documents that should support it.
Article (73): Classification of taxpayers:
The income-taxed payers are classified into the following categories:
A) large taxpayers.
B) middle-taxpayers.
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C) small holders (small and smaller establishments).
The Minister shall, upon a written suggestion from the Authority
Chairman determine the bases and levels of the two categories of senior
and middle-taxpayers in accordance with this classification.
Article (74): lease of Real Estate Notification
A. Every owner, or a beneficiary of real state and real state agent or the
head of neighborhood shall submit a notification of lease based on the
form designed for this purpose, such notification shall be submitted to
the tax authority within (60) sixty days of the date of property lease.
B. Local authority boards shall furnish the authority with statements
and information concerning the lease properties and any changes on the
lease value that would affect the tax assessment on real estate returns,
these local authorities shall also take commitment actions that would
ensure collecting the tax under the provisions of this law through
coordination with the authority, the executive regulations shall
determine the ways and procedures of implementing that.
Article (75): furnishing the authority with estates
The ministries, authorities and departments' officials who are
responsible for issuing licenses for the performance of commercial
activities, industrial works and certain vocations or permits for
utilization of real state in setting up commercial business, industries or
certain crafts, must notify the tax authority every time they issue a
license with data related to the licenses within (30) days, according to
executive regulations. Concession, obligation and monopoly and any
permission to commence trade, industry, or craft, as well as import
licenses are considered as a license that was mentioned earlier.
Article (76): Notification of Authority of Investment Projects:
The General Authority for Investment, as well as the relevant authorities
and powers which are granted licenses for the establishment of
investment projects or the granting of licenses to bring in foreigners for
any purpose, including experts and technicians comply with the
following:
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A) Notifying the authority when granting any license data for all
licensed investment project within thirty days and identified according to
the Regulations.
B) Not to issue or renew a certificate of tax exemption to the taxpayer
exempted under the Investment Law, in case they failed to submit tax
returns, documents and information stipulated in this Law and
Investment Law, unless the holder of a valid tax ID.
Article (77):
The tax authority may conduct a survey to identify taxpayers from time
to time as determined in executive regulations of this law. It is obligatory
for all pertinent parties to cooperate with the tax authority in the survey.
Chapter II
Tax number and tax Card
Article (78): Tax ID No.:
an Authority shall issue the tax number bearing the number of taxpayer
belonging to the authority, that the executive regulations shall take
necessary actions to grant the tax number.
Article (79): Tax Card
The tax authority shall issue tax card to each taxpayer demanding it that
should be renewed annually after submitting the tax declarations by the
taxpayers according to the applicable tax laws, the executive regulation
shall determine the data included in the tax card, validity date. The tax
card is one of the important documents that are required for the
advertising contracting any financial, commercial procuration,
importation, or on the issuance, renewal of the kinds, licenses for
professional practices.
Article (80): The commitment of Observation Authorities, boards:
47
A. The commitment of parties and monitoring authorities, the custom
authority and concerned parties shall confirm the tax number is
included in the custom bills of importation, exportation, and also the
various taxpayers, transaction documents, therefore tax number
should be paired with the taxpayers, name permanently.
B. All state official parties and its control and monitoring authorities,
on their regular and sudden inspection of the activities, indicated in
the article (79) of this law and the indicated parties in paragraph A
in this article make sure that tax card system is applied in a sound
manner to all dealing and activities.
Chapter III
Cessation and Waiver
Article (81):
If the activity for which the tax is imposed, ceases completely or
partially of vacating of the real estate subject to real estate tax, the
relevant tax shall be collected until the date of such cessation or vacating
in order to benefit from this provision, the taxpayer shall, within thirty
(30) days from date of cessation of activity or vacating of the real estate
(even if this was for reasons beyond the taxpayer's control), notify the
tax authority and submit the documents and information that necessary
to prove such cessation or vacating, otherwise he shall be liable to pay
tax for a full year.
Article (82): waiver notification
Total or partial relinquishment of an establishment, or sale or disposal
of real estate shall, as far as tax is concerned be treated in accordance
with the provisions of article (81) of this law, as applied to cessation and
relinquishment the assignor, assignee, the seller or the person disposing,
of the property shall notify the tax authority of the transaction within
thirty (30) days from the date of the above mentioned transaction,
whether it was for total or partial assignment or sale. The assignor and
assignee, seller and buyer shall be collectively responsible for all taxes
that become due until that date.
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Part 2
Right of Review and the Profession Secrecy and books , records
Article (83): Duties of The General Employee
All judicial and administrative officials must notify the tax authority of
any documents or statements relating to their work, which may lead to
belief that deception has been committed, or the commission of a crime in
tax matters, or any other evasion to avoid the payment of all part of the
tax, or to cause any obstruction that impedes its payment, whether it is a
civil, a commercial or a criminal case or any penal investigation, even
though the cases have been decided or suspended.
Article (84): the Right to Inspection
a. All concerned staff of all government administrative units, public and
mixed sector corporations, various types of banks, by owned
establishments, companies sector private individuals, and all branches of
foreign companies, must permit the tax authority staff to obtain any
information or data about the activities of the taxpayers, upon request,
for the of assessment tax the determining of purpose the establishment or
those who deal with it. These parties may not under any circumstances
obstruct tax authority staff form obtaining data, information, records or
documents of the activities related to the tax assessment.
b. When denied access under the preceding provision, the tax authority is
entitled to estimate for all related taxpayers their data, describes in
paragraph (a) of this article, for activities carried out by them as refereed
to in paragraph (a) of this article. Such estimation must be made in such a
manner as to protect the rights of the public treasury.
c. In case of denied access referred to above, the tax official by an
taxpayers the notify shall authority acknowledge registered letter,
demanding the taxpayer to comply with requirement of paragraph (a) of
this article within 30 days. If the taxpayer does not comply, a penalty
shall, and the party shall be assessed equal to one percent (1%) of the
49
estimated tax, and the party shall be required to pay immediately upon
notification of the penalty assessment.
Article (85) Collecting Information
A) The exempted institutions, establishments under this law, the
investment law or any special laws and also the companies working in
the of oil, gas and other minerals, and their contractors and the sup-
contractor of those contractors must submit their records and any other
necessary deeds, for the purpose of applications of law.
B) The authority may, upon writing notice, demand the indicated parties
in the paragraph (a) of this article during the working time, the actual
information and data about the salaries, wages, benefits, money pockets
in cash or in kind, granted to the employee or labor, any other deeds,
documents etc. that could be appeared useful to the purpose of this law.
For the purpose of applying this law.
C) The authority may demand for any information, data, and deeds. Upon
a written advice for taxpayers whom shall be granted a period of 15
days for collecting those data from the demand date, the chairman or
any one charged by him shall extend this period not exceeding one
month if the taxpayers proved that he faced difficult in submitting the
demanded data within that limited period with a sound evidence.
Article (86) Records an Bookkeeping
All taxpayers should maintain books if account. The kind and details of
these books, and the classes of taxpayers who have to maintain them.
Shall be specified in the income tax law executive regulations.
Article (87): provision of the contract with the Auditors:
On large taxpayers to provide the stakeholders with a copy of the
contract with the Auditors during the month from the date of conclusion
of the contract, as well as in cases of renewal, modification or cancellation
of such contracts.
Article (88): the retention period of books and records:
Without prejudice to the provisions of the Commercial Law, the
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taxpayer must keep invoices and documents and records according to
the following:
A) Holding invoices and documents related to his activity for a period of
not less than five years.
B) Holding books and records mentioned in Article (86) of this law for a
period of ten years following the end of the fiscal year in which the
registration on records has been conducted.
Article (89): regular accounts consideration :
The Authority should not reject accepting the regular accounts held by
the taxpayer and in accordance with Article (86) of this Act and the
executive regulations, unless it was proved to the Tax Authority under
deeds and documents that such accounts were groundless.
Article (90): The Computerized Accounts :
In the case of the using computer systems by the taxpayer, such
systems or the system is an alternative source to the written accounts,
these systems must be in Arabic, found in the establishment
headquarters in the Republic to be revised by the authorized staff of the
Authority , and the executive regulations shall organize holding
these accounts and the principles of the transition from the manual to
automatic (electronic) system of accounting.
Article (91): Forcing tax-exempted persons to hold a dependent accounts
,bookkeeping:
To all taxpayers having a tax exemption under the Investment Law or
any other law shall maintain regular dependent accounts and books for
those exempted projects. And there shall not , in any way, be any
confusion between the excepted incomes ,its expenditures and the non-
exempt incomes and expenditures.
Article (92): Field Audit and Inspection:
For purposes of application the provisions of this law , and upon a
written authorization from the tax chairman or any charged body from
him, the taxpayer should enable the Tax Authority staff to enter during
51
working hours of the establishment to the headquarters and the
workplace, in order to view, inspect and revise the books and records
and documents which are due on keeping , maintaining by the
taxpayer.
Article (93): The funding lease Data:
The landlord is committed to expose the funding leases in his accounts ,
records , including the date for due rent payments and part of these
payments, which are the reimbursement of the value of the leased asset
and the rental returns as well as the disclosure of further necessary
clarification .
Article (94): the professional secrecy commitment :
Every person , who by virtue of his job, his competence or his business
has a relation in the assessment or collection of taxes presented in this
Law, and or possibility of settling the disputes generated from such
taxes , is bound to observe the' profession secrecy' in accordance with
what the Law decides , so, if he disclosed a secret he must be punished
by imprisonment for a term not exceeding one year , or a fine of not
more than three hundred thousand riyals
Part 3
Tax Declarations
Chapter I
Tax Declarations on commercial and industrial profits
Article (95): date of submitting the declaration :
A) Each taxpayer should submit Tax Authority annual declaration on the
form prepared by the Tax Authority for this purpose no later than
thirty of April of every year for the previous tax year. And that taxpayer
shall pay the due tax at the same time , and the Tax Authority shall
accept the tax declaration on the responsibility of the taxpayer.
B) taking into account the comprehensiveness of the provisions clarified in
paragraph (a) of this Article ; the taxpayers , who are committed to
52
system of the overlapping fiscal year must, submit their tax assessment
no later than the end of the fourth month of the expiry date of the
financial overlapping year to the taxpayer.
C) A taxpayer who submits the declaration , pay tax before deadline will
obtain a deduction of the due tax like the following proportions :
- 1.5% in the case of a declaration and payment of tax during the month of
January.
- 1% in the case of a declaration and payment of tax during the month of
February.
- 0.5% in the case of a declaration and payment of tax during the month
of March
Article(96): The Imposed to the Submission of Declaration :
A) The senior taxpayers must submit their tax declarations annually on
the legal time, on the form designed for this purpose from the Tax
Authority . Such declarations shall be accompanied by financial
statements.
B) All taxpayers, who are exempted from taxes under the investment law
or any other law, must submit to the Authority annual tax declaration
on the form designed by the Tax Authority for this purpose , and in
accordance with the conditions, deadlines and procedures set out in this
law.
C) The Middle taxpayers must submit their tax declarations annually on
the legal time , and on the form designed for this purpose accompanied
by the income statements and these declarations should be based on
regular accounts.
D) Small businesses taxpayers must submit their tax declarations in
accordance with the provisions of Article (37) of this law.
E) In any case, the tax declaration must be perfect as for the basic
conditions as follows:
1 – the declaration submitted by the senior taxpayers (either taxable or
exempted) shall be certified by accredited, chartered accountant that is
licensed to practice the profession of accounting audit (review), and
owns a valid tax card. The ratification made by charter accountant is
53
confirmation to indicate that the taxable income based on the
declaration submitted by the taxpayer was calculated with according to
provisions of this law executive regulations.
2 - that the declaration made by the economic units of the public, mixed
and its subordinate units shall be ratified by the Central board for
Control and Accounting according to this laws of the board.
3 – All tax declarations shall be signed by the taxpayers or whoever legally
authorized by them.
F) The Executive Regulations shall clarified the data and conditions of the
tax declarations, as well as the standards which are necessary for the
classification of the taxpayer categories such as senior taxpayers and
middle-taxpayers.
Chapter II
Tax Declarations on Non-Commercial and Non-Industrial
Profits
Article (97): The Bound by the Declaration and Submission Date:
A) The taxpayers of the taxable non-commercial and non-industrial
professions must submit their tax declarations annually to the Tax
Authority, against the form designed for this purpose no less than the
30 of April each year, following the prior tax year, so the due tax on the
net profit shall be paid by the time determined for submitting the
declaration.
B) the provisions of the tax declarations indicated in the Articles (95.96)
of this Law shall be applied to the senior and middle taxpayers,
provided that the declarations submitted by charger accountant about
his activity shall be authenticated by another charter accountant.
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Chapter III
The Tax Declarations on Salaries and Wages
Article (98): Tax Calculations:
Tax is calculated based on the incomes specified in the tax declarations
presented by the employer or the employee, or user in the case of being
responsible to pay the tax.
Article (99) Tax Cutting-off
The salary tax hall be deducted monthly by the employer from the paid
earnings of the employee, insuring that the deduction from paid
earnings occurred in the month on which the services were rendered.
Article (100) The employer responsibility
In principle, the tax is due the taxable earning owner , although the
employers are legally assigned to deduct it and remit it to account of the
tax authority, even when the tax due is not deducted from the
taxpayers' earnings,
Article (101) Imposing on employer of tax declaration , payment
A. Employers shall deduct the tax due on their employees and laborers
form their earnings, and pay it to the tax authority according to this law
within the first ten (10) days of each month, for the proceeding month .
They must support the payments of the tax deducted with a declaration,
whose form is outlined in the executive regulations,.
B. In case the employee or laborer works for more than one employer
simultaneously, he is personally responsible to pay the different tax
rates due on this earnings within the limited period of time stated in
this article, without prejudice to the obligations of the employer to
deduct and remit the same tax due.
Article (102) is responsibility of the employee obtaining an income from
non-resident:
If the employer or the one obligated to pay the taxable amount is not
resident in the Republic, or did not have a center or facility, the
55
obligation to pay the imposed tax shall be upon the obtainer of amount
subjected to tax, in accordance with the rules and procedures prescribed
by the Regulations.
Chapter IV
Real Estate Tax Declaration
Article (103) The imposed persons obliged to tax declaration and ,its
submission date :
The taxpayers of real state returns must submit annual tax declaration
on the prepared form for this purpose , that declaration shall be
accompanied by a copy of the lease no later than the thirtieth of April of
each year following the former tax year , it will include real estate
description statement and the real monthly rental amount , the
taxpayers must pay the tax due out of the declaration at the time of
submission based on the provisions of this law .
Chapter V
The declaration of tax on the transfer of the real estate ownership
Article (104) Date of filling the declaration :
All these taxpayers shall submit their tax declaration within a period
not exceeding four months from the date of disposition or sale of the
property, and pay the tax due on the same date.
Article (105) is responsibility for filing the declaration :
The seller and the person executing the transaction of the real estate .
are responsible for submitting the tax declaration .
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Chapter 6
General provisions in the declarations :
Article (106) The leave of foreign taxpayer
The foreign taxpayer who intended to leave or cut his stay in the
republic shall submit the tax declaration before his leave no more than
Sixty days of cutting his stay , unless this stay cutting off or leave was
out of his control , thus he must pay the tax due of his declaration at the
same date
Article (107) the schedule of declaration in case of death:
A) whenever death of taxpayer is declared , the heirs or the property
guardian or the liquidator must submit the tax declaration of the
previous phase of death within ninety days of the date of death ; and
that taxpayer shall also pay the due tax at the same date.
B) When the death case occurred during a legal period of filling the tax
declaration , such period shall be considered the best stage for the
taxpayer .
Article (108) extending the schedule of submitting the declaration:
The tax authority chairman or anyone in charge of him has the right to o
extend the due schedule for submitting the declarations for a period of
thirty days , if the taxpayer requested that in writing in fifteen days
prior to the end of the legal date for filing the declaration , provided
that it has sufficient reasons acceptable to the tax authority , and the
taxpayer shall pay the amount of due tax according to his estimates in
the date of requesting the postponement , and in any case , this
extension do not affect the time limit for payment of tax.
Article (109) in the case of material mistake on the declaration :
Regarding provisions of Article (95) of this law, the taxpayer, that
found a material error in his declaration, shall submit to the tax
authority within the specified period of declaration revision , adjusted
declaration that includes error correction and the tax payment of
declaration itself, with payment of the due amounts which are added
57
according to Article (152 ) of this law, and that taxpayer - in this case –
shall not be considered that he has committed a violation of the
provisions of this law, unless the tax authority had found out that
mistake before the knowing taxpayer whom was informed with that
breach of law .
Article (110): Posting the declaration in the registered mail box by mean of
the proof of delivery information , or submitting that declaration by the
reliable communication means from the competent parties or the tax
authority ,such kind of filling can be regarded as the right intended
submission under the provisions of this law .
Article (111) The declaration schedule in case of cessation:
When the taxpayer went on stopping its activity or proceeding a
complete waiver or liquidation of the establishment , that taxpayer
shall submit the tax declaration within Sixty days of the cessation date
,or waiver , or liquidation, and to submit the due tax thereof on the
same date.
Part IV
Tax assessment
Chapter I
The self-assessment and the declaration revision
Article (112) self-assessment:
A) The self-assessment means that taxpayer determines the tax base
and to and calculating the tax due on him, accordance with the
provisions of this law, and the taxpayer must pay the due amount of
tax from the declaration itself , at the day of submission without the
need to claim the tax authority .
B) The taxpayer shall be responsible for the validity of the tax
declaration .
C) The tax shall be assessed to the transfer of real estate based on the
taxpayer's recognition in the document stated the ownership transfer
of the real estate , such document has the charge of evidence , except
58
the cases which the tax authority prove them incorrect therefore , the
authority is responsible to prove that .
Article (113) The review of the declaration:
A) The tax authority shall review, audit the statements made by the
taxpayers during the legal date, from annual samples selected from
such declaration , on the basis of risk evaluation . Based on a written
suggestion from the Tax Authority Chairman , the Minister shall issue a
resolution stating the rules and criteria for determining the risks and
selecting the sample .
B) In all cases, the offered declaration shall be revised at the legal date
within two years starting from the date of handing over the declaration
by the tax payer to the authority, such declaration shall apply to the
legal and formal provisions, if the authority do not notify the tax payer
about refusing his declaration within two years of the declaration
receipt date such declaration is considered to be acceptable, this period
may be cut off by notifying the taxpayer with elements of additional tax
assessment by written statement for submitting them, or by referring
to legal committees, according to prescribe procedures on this rule shall
not apply to declaration presented in date rather than the legal date
,cases of evasion or fraud cases of any kind, or when the thus
Chapter II
Estimated and Additional Assessment
Article (114) Estimated Assessment:
Without prejudice to fines and penalties stipulated in this law, the tax
authority has the right to conduct an estimated assessment to the tax
when the taxpayer do not submit his tax declaration on time in
accordance with the provisions of this law . The estimation is based on
available data and information in accordance with the rules and
principles prescribed by the executive regulations that are consistent
with the nature of each activity or profession.
59
Article (115) The cases of the additional assessment :
A) The tax authority shall not re-audit (re-review) and assess tax for
an already reviewed ,assessed tax period , except in case of obtaining
new information and data supported with valid documents, and
have an impact on the calculation of the amount of the due tax , and
the review , audit and tax assessment must be done within the scope
of this information only.
B) Notwithstanding the provisions of paragraph (e) of this Article ,and
within two years from the date of filing the declaration, and when true
documents which can prove beyond doubt the invalidity of the
declaration provided by the taxpayer and evidence that shows the
violation of the declaration to the structure of self-assessment, the tax
authority may carry out field review and audit and identify the tax
base in which the taxpayer do not mention it deliberately within his
declaration and, the authority may also proceed the extra assessment
to the due tax with which the taxpayer shall be notified under the
provision of this law .
C) The written notification to the taxpayer for payment is considered as
final notification .However, the tax authority shall conduct an
additional assessment if it ( the authority ) realized that the taxpayer
did not provide correct data, or refused to provide instruments ,
information and data required to prove the validity of his declaration,
or damaged the records , books before the specified period for that
damage expires , or practiced fraud of any kind to get rid of all or part
of tax payment, and tax authority may perform an extra assessment
unless the taxpayer submit the declaration and the tax was assessed
based on its estimation by the authority which then found out taxable
activities, amounts were not known while conducting the assessment ,
not covered by evaluation , and the taxpayer had submitted incorrect
data or made false statement ,or submitted not including the forms of
his entire activities or refuses to submit books or records which are
due to be held by him .
D) In all cases referred to in paragraphs (a, b, c) of this Article , and
without prejudice to the sanctions stipulated in this law, the tax
authority shall notify the taxpayer with the additional assessment and
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determines the amount of tax due on that taxpayer , and the additional
assessment shall be subject to appeal as the original assessment .
E) The tax authority shall carry out the additional assessment for tax in
accordance with two paragraphs (a, c) of this Article within a period
not exceeding three years from the date of its being received reports
about the incident of evasion or obtained of the hidden data and
information.
F) There shall be taking into account in applying the provisions of
this Article , the distinction in the procedures related to the
process of the additional assessment of the due tax on the
taxpayer notified directly by the authority, such procedures shall be
distinguished from those related to the application of the tax evasion
punishment on the same taxpayer such procedures may lead to rising
a lawsuit before the court in accordance with the provisions of Article
(144 ) of this law.
Article (116) The Prior Announcement and centralization of Assessment and
Notification:
A) The authority shall inform the taxpayer about the exact date and place
of calculation prior to the date of executing such calculation , as
determined by the executive regulations.
B) According to the name of the natural , legal taxpayer the tax shall be
assessed on the total of the branches or subsidiaries to the same legal
entity which they are invested in the headquarter of these subsidiaries
within the Republic ; and when non-specifying that subsidiary ,the
assessment shall occur in the branch located in the Capital or in the
branch location of much business . The collected taxes for the local
authority are excluded from the assessment centralization without
prejudice of the provisions of the paragraph (c) of the Article (53) of this
law .
C) In any case , the taxpayer shall be notified about the due tax on him in
accordance with the provisions set forth in Chapter 4 of Part 5 of this
law.
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Part V
Opposition proceedings of appeal and Judiciary
Chapter I
Objection and settlement
Article (117) objection to the tax assessment:
A) The taxpayer who has been assessed has the right to object in writing
within thirty (30) days from the date he receives the assessment
notification . If the objection is submitted after the period indicated
above , provided that the authority is convinced that such delay was
caused by the taxpayer being abroad or for any other acceptable cause,
the period may be extended by another 15 days from date of expiration
of the first period .
B) The taxpayer's tax-assessment objection submitted in the determinate
date mentioned in the paragraph (1) of this article is referred to the
settlement Committee established under the Article (118) of this law and
the objecting taxpayer shall be called to a meeting to discuss his
objection and shall have the right to submit all supporting documents
and proof . The tax Authority is entitled to ask for the necessary
information and necessary details as well as the submission of records
and documents so that it ( the objection )proceeds as follows :
1 - If there had been agreed with the taxpayer , the Committee's decision
under the signed agreed minute would be decisive and the tax would be
due immediately .
2 - In case of disagreement between the two parties, and the taxpayer did
not agree about the settlement reached to by the Committee under the
documents and information disclosed therewith , or when the taxpayer
did not attend without excuse after being summoned in writing to him
by the Committee twice in a row, the tax shall be assessed upon what
the is decided by the committee , without exceeding the tax assessment
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and not less than the objection limits of the taxpayer and this decision
may be a subject to appeal before the committee of tax appeals within
thirty days from the date of announcing the taxpayer of the decision ,
and in case of non-objection at the determined date that assessment
shall become final and not appealable ,that for which tax is paid
immediately.
Article (118) Establishing these settlement committees and its functions:
A) The general settlement committees shall be established in the large
taxpayer administration and its branches and the tax office in the
Capital , governorates with its sub-governorates , and the Tax Evasion
Avoidance , such committees shall be formed ,and its members shall be
nominated all under a decision made by the Authority Chairman .
B) The settlement committees shall specialize as follows:
1 - Research and study the differences and objections submitted and
referred to it ( the committees) by the taxpayers .
2 – The taxpayer's objection to the tax assessment issued by the tax
administration based on the results of its review of the tax declaration
submitted by the taxpayer.
3 – Taxpayer's objection to the tax assessment issued by the tax
administration based on its estimates.
4 - Taxpayer's objection to the additional tax assessment issued by the tax
administration in application to any additional tax assessment under
this law .
The settlement committees have the right to modify the assessment
decisions in the light what can be appeared , submitted of the
instruments , documents to them (committees ) , their decisions shall be
final or due for both Tax Authority and Taxpayers if the later accepted
the settlement .
C) The Settlement Committee must made its decision on the objection
presented by taxpayer within a maximum period of thirty days from
the date of submitting the objection, unless some justifications lead to
the delay.
D) The Settlement Committee shall make an unanimous resolution which
shall be signed by the Chairman of the Committee and members, and
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executive regulations shall determine the rules and procedures of these
committees.
E) Without prejudice to the provisions of paragraph (a) of Article (117) of
this Law, the taxpayer may ,when not desired to object or attend before
the settlement committee, make an appeal against tax assessment issued
directly by the Tax Administration before the Appeal Committee within
Sixty Days from the date of his receiving the notification on assessing
the tax issued by the Tax Administration .
There shall not be regarded as a recognition of the tax assessment or fall
down of the Taxpayer's right in the direct appeal before the Appeal
Committee . Tax payer's lack of objection on the tax assessment issued
by the tax administration during the period specified in Article (117),
paragraph (a) made by the taxpayer .
Chapter II
Appeal to the Commission
Article (119) Establishing Appeal Committees and Their Functions :
A) The tax committee , which settles tax appeals , shall be nominated as
described here, by a resolution to be issued and location its clarifying
Finance of Minister by the jurisdiction , and composed of :
A legal experienced auditor from the league of Accountants
Chairman
Tow (2) specialized staff from the Tax Authority as
members.
Tow (2) representatives from the Chamber of Commerce and Industry
or from a professional society
as members
The committee Secretary who is not allowed to vote
B) The above tax Committee shall look into the tax appeals that are made
by the taxpayers against the assessment resolutions issued from the
settlement committees or those issued from the Tax Authority , and it
shall resolute decisions approved by the assessed tax and amending
them in accordance with the documents and instruments offered
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therewith , and that must not exceed the assessment of the authority
and not less than the taxpayer's appeal , any meeting shall be held only
by attending the chairman and the majority of the committee members
under the provisions of this law
c) The executive regulation shall specify the working committees of appeal
within the General administration of Taxpayers , and its branches , the
tax offices in the capital as well as the governorates with sub-
governorates and the tax evasion fighting ; thus the regulation will set
out rules , work procedures of these committees
Article (120) appeal procedures:
The appellant shall demonstrate in the appeal petition the following:
A) the amount of tax that he acknowledges for each year , the basis of
his objection ,and the documents which support his
acknowledgement.
B) Pay the tax which he has acknowledged in his appeal statement . The
appeal shall not be formally accepted unless accompanied by a receipt
for the settlement of the tax acknowledged .
Article (121) the decision of the appeal committee:
A) Seven (7) days prior to its meeting, the Tax Dispute Committee shall
summon the taxpayer , and the Authority , or their representatives, to a
meeting to discuss the appeal, or confirm their satisfaction with the
adequacy of the documents they submit to the Committee. If the
Taxpayer does not attend, another appointment will be arranged for
him within a seven days period. The Committee has the right to
scrutinize the objection, if the taxpayer does not attend on time without
any excuse , postponing to look into the appeal for a period not
exceeding other seven for only one time .
B) the taxpayer shall provide evidences and instruments supporting
his appeal, and the Commit tee has the right to request information
and the necessary details, and require the presenting the necessary
records and instruments .
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C) The Committee shall discuss the differences brought up in the
taxpayer's appeal and scrutinize into it upon documents provided to
that committee.
D) Committee shall prepare minutes for meetings . And final minutes
which shall include all points of differences and the basis of its decision.
E) The Committee shall issue its decision in ht case within a maximum
period of two (2) months from the date of submission of the appeal
statement . The decision shall be issued by the majority of the attendees,
provided that at least a member from each party shall attend , and in
case of that the votes are equal , the chairman's side may have the right
of decision , and these decisions shall be signed by the Committee
Chairman and the secretary .
Chapter
The appeal and Judicial Resume
Article (122) Appealing the decision of the appeal committee:
A) The Authority or the taxpayer may appeal the decision of the Tax
Appeal Committee before the Income Tax Court, formed under Article
(124) of this law, within 24 days from the date of receipt of the Tax
Appeal . When not appealing in the determined date the tax assessment
would become final based on a decision of the Appeal Committee , and
the due tax shall be paid whereby immediately .
B) The Authority chairman is the legal representative of the authority and
its branches before the jurisdiction of various bodies and levels and in
all what is submitted or raised to it by or against the authority – and the
authority chairman shall authorize anyone from the authority
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employees who are specialized in accord with the procedures set out in
the executive Regulations.
Article (123) The acceptable tax payment
The taxpayer's appeal against the decision of the committee shall not
be formally acceptable until the taxpayer pay the amount of tax
accepted by him out of the decision of the appeal committee.
Article (124) First Instance Tax Courts:
A) A full time, first instance courts shall, under the provision of this
law , be established for scrutinizing ,settling the tax cases in the capital
and governorates , and that shall be the jurisdiction to look into all tax
disputes of felonies, civil kinds and appeals of seizure, and excuse cases
, and these courts shall be formed in accordance with the provisions of
the judicial jurisdiction law, provided that the judiciary members shall
be experienced in both financial and tax aspects
B) The elementary tax courts shall qualitatively specialized in the following
1- To scrutinize appeals submitted by the authority and taxpayer
appealing against the decisions of income tax Committee and general
tax on sales , and the appellants should submit document as an evidence
for proving the soundness of his their appeals.
2- To scrutinize cases which are connected with the tax violations, crimes
of the tax evasion arising from the Authority or Prosecution based on a
request from the Authority Chairman , and that shall not contradict
with the powerful laws .
3- To scrutinize the lawsuits, requests of seizure related to the tax
allowances brought up to those courts under the provisions of this law.
And the law of General Tax on Sales , and Public Property Collecting
Law.
4- To carry out the final tax provisions .
C) The Court shall hold secret meetings unless it saw otherwise, and it
shall judge on tax cases as a matter of urgency , and the Attorney
General shall be representing the in criminal tax litigation and assisted
by a delegate from competent tax administration when requested .
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D) The court can be assisted of whom that court sees experienced in any
of the areas of taxation, financial, or both; such assistant shall belong to
be neutral or unbiased party.
E) The Court shall find ( rule ) within two months from the date of the first
hearing for the lawsuit or appeal ,unless there were justifications
caused the delay, and the court's rule shall not exceed the amount of
tax-assessed from the authority and not less than the limits of the
taxpayer's objection or appeal .And tax assessment shall be amended in
accordance with the decision of the Court .
F)The taxpayer or the Tax administration may appeal against judgments
of the income tax court before the judicial division courts for income
taxes in the appeal courts located in the governorate ,shaped under the
Article (125) of this Law, within thirty days from the date of receipt of
the decree.
G) The exclusive area jurisdiction of the income tax courts shall be
determined under a decision made by the Supreme Judicial Council on
a recommendation of the Minister of Justice.
Article (125) The Judicial Divisions of Appeal :
A) Special ,full time Judicial appeal courts shall be formed and
governorates to settle income tax disputes. They shall be the only
bodies that shall have jurisdiction to decide tax cases and related
violations. The formation of these courts shall be made in accordance
with the provisions of the Judicial Jurisdiction Law, provided that their
members are experienced in the fields of finance and taxation .
B) The Judicial Divisions of appeal shall specially look into and settle the
appeals made against the judgments , decisions found by the Judicial
courts of tax ,which are located in its special jurisdiction department
and its geographical space .
C) The appellant shall not make any new applications before the
Specialized Appealing Division ,since he does not present those
applications before the judicial courts of tax . The Division of Appeal
shall aim of its own not to accept these applications .
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D) With the exception to the cases set forth in paragraph (b) of Article
(126) of this law , the judgments found by the Judicial Divisions of
Appeal are final and not subject to appeal.
E) The Appellate Division shall issue its judgment within two months
from the date of the first hearing to appeal for resuming the case unless
there were serious justifications that lead to the delay .
Article (126) Tax Department of the Supreme Court:
A) Without prejudice to the judicial Jurisdiction Law , under the force of
this law, a specialized , full-time Department shall be established in the
Supreme Court to adjudicate on appeals which are allowable to file to
that Court as an appeal against the judgments found by the Appellate
Tax Division .
B) the taxpayer and the tax administration may appeal to the Tax
Department in the Supreme Court against the judgments of Appeal
Divisions of Tax within thirty days from the date of receipt of
government and in any of the following circumstances:
1 - If the contested judgment was based on a clear violation of law or
mistake in its application.
2 – If the judgment was nullified and that verdict's text was contrary to
the its findings.
3 – If judgment contains things not required by the litigants or more than
they requested.
4 – if two final tax judgments were contrary to each other in two litigations
and liabilities , subject and the reason were united .
A) There shall be taking into account the taking up appeals and tax
lawsuits and in various stages of litigation, consolidate the unity and
identity of The Tax Law.
Article (127) referral to the Attorney General :
The first instance courts and the Jurisdiction Division of taxes in the
Appellate Courts in the Capital and the governorates shall refer the
cases or the scrutinized appeal by them to the public Attorney General
for investigation and disposal therewith, in accordance with the
provisions of Chapter II of Part 6 of this law and the powerful laws, and
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that would be when it (the Attorney General) discovers any cases of tax
evasion, including, for example :
1 - if the court finds that the appeal contains merits that are subject to
the tax and the taxpayer's evasion from payment or when that taxpayer
require to get back funds from the public treasury through using false,
incorrect data or documents using fraudulent ways to circumvent the
law.
2 - when the court finds out that the appeal or the legitimating are
associated with other taxpayers who are participating in a tax evasion
process .
3 - when confirming that there is any collusion between the taxpayer
and any one of tax administration staff that would result in tax evasion.
Article (128) proof Responsibility
A) The responsibility to proof on the Authority when applying the
following:
1 - Additional assessment.
2 - Method of proof on the basis of signs and indicators of tax evasion.
3 – Disapproving the tax declaration submitted by the taxpayer.
B) a duty of proof on the taxpayer when:
1 - The Authority shall apply an estimated assessment .
2 - requesting the taxpayer to correct a mistake not intended in the tax
declaration .
3 – objection made by the taxpayer on the content of the notification of
the tax.
Chapter 4
Notifications
Article (129) Notification:
The notification is the official means to notify the taxpayer of all the
procedural actions that are provided for in this Law. The Executive
Regulations will specify the form and the particulars of the notification .
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Article (130) Methods of reporting:
The taxpayer or the party shall be advise of notifications issued by the
authority in one of the following methods:
A) Sending the notification to the taxpayer or the party through the
administrative advise reach to the establiment location or the fixed place
of the taxpayer , or the selected place which is determined whereby , or
his legal representative.
B) Sending the notification to the taxpayer through post office
accompanied by acknowledgment of receipt to the last known address
that is registered in the Authority or by e-mail to the taxpayer.
Article (131) Delivery of Notification:
The notification shall be considered to have been delivered correctly
and produce all legal effects , even if the taxpayer rejects it, as long as it
is delivered in the presence of the taxpayer or his legal representative .
In this case the refusal of the delivery shall be documented on the
original of the notification by having it signed by one of the Tax
Authority personnel ,if such a notification is sent through the
administrative advice , or by having it signed by the postman in case it
is sent by registered mail through the post office .
Article (132) Notice in case of closure:
In case of the establishment being closed , the absence of the owner , and
was difficulty in serving the notification to the taxpayer through one of
the methods indicated in Article ( 130 ) ,(131) of this Law, the same shall
be documented in minute to be written by one the Tax Authority
personnel , and signed bye a district official sage or the people's defense
committees, whose jurisdiction the office of the establishment is located,
, And there shall be a certified copy of the notification along with the
minutes which shall be circulated and posted in the advertising panel
in the authority , and on the establishment gate after moving properly
of the Authority 's delegate to the establishment headquarter to
investigate necessarily for affirming the constant closure and the
absence of the taxpayer .
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Article (133) notification legality of the tax:
Notifications effected in accordance with the provisions of this Law ,
shall not become invalid due to a deficiency or a shortcoming in their
form, or due to unintentional error that does not affect what it's meant
for.
Part Six
Infringements & Evasion Crimes
Chapter One
Tax Infringements
Article (134) Violations & Penalties:
A)Without prejudice to the fines provided for in other articles of this act,
shall be punished with a fine set forth in paragraph (B) of this article in
addition to paying taxes and penalties owed by everyone who commits
the following acts:
1) By not to add or deduct on procedures or failure to collect and
deposit the tax in the authority account according to the provisions of
this law.
A) Failure to notify the authority to start practicing any activity or
profession submitted to tax or during rent property or changing a
business address.
B) Delaying to provide a notification to stop the total or partial activity or
profession during legal period.
2) Delayed to work the requirements of any notice or request was
issuing him under this act fail to appear without justification to
response the notice, which issued by reason or for any reason.
3) Ignore to receive any notice in accordance with the provisions of this
law.
4) The usage of incorrect tax number for any legal documentations or
used for purposes in this act.
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5) If any authorized staff not enable to carry out their duties or their
exercise or of their specialization to review, or refrained to providing
notebooks, records, documents or awareness to them, or refrained his
acceptances, which they require of statements and information
according to this law.
6) Absence of the attaching party for submitting his attach declaration
to the authority by the court order under his liability from taxpayer
funds attached on treasury in time, or presenting declarations include
false information.
C) Any person will be punished who commits one of the acts in
paragraph (a) of this article by the following penalties:
1) A fine of (600,000) YR for the large taxpayers and exempted
taxpayers according to investment law or any other private acts.
2) A Fine of (125,000) YR for mediator of taxpayers.
3) A fine of (5000) YR for small establishments.
In all cases, fines will be double in case of repeating violation.
Article (135) fines of delaying declarations:
A) Impose a fine for the delay by the amount of (2%) from his due tax
every month or part of the month delay taxpayer providing the
declaration till last legal time, not to be exceeded the fine amount due
tax.
B) In all cases if shown providing the declarations (after the legal period)
result of loss operations impose a fine of not filling tax according to the
following:
1) Delay penalty in the sum of (5,000,000) YR, for exchanges, banks, and
the financial corporation’s of various definitions and insurance
companies and operating Oil & gas mining’s and contracting with state
to provide telecommunication services ( Cell phone and mobiles) as well
as the operating scope of international telecommunication and satellite
channel services.
2) A delay penalty in the sum of (1,000,000) YR, for other large taxpayers
not specifying in clause (1) of this paragraph.
3) A delaying penalty in the sum of (200,000) YR for mediators
taxpayers.
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Article (136) A fine on exempted taxpayers:
Applicable delay penalty specified in paragraph (A) of article (135) of
this law on the taxpayers mentioned in a paragraph (B) from the article
(96) of this law in case of absence to submitting the declaration in legal
specify period, and the fine amount will be calculated of exempted tax,
in the absence of profit, or when result of free activity account at loss
end of the year, to implement provisions of paragraph (B) of the same
article (135) of this act.
Article (137) fines of in completed declaration:
Without prejudice to provisions of the article (141) of this act, if the
taxpayer provides or submitted tax declaration and the tax amount was
less than the tax amount, which became due on the taxpayer in final
way and not subject to rebuttal of the same tax year,
those were the amounts resulting from an act of tax evasions; impose a
fine on the taxpayer according to the proportion and amount of the
difference in the declaration of tax that became due and as follows:
A) (20 %) from the due tax of the amount that had not been included, if
amount equivalent from (10 – 20 %) of legally due tax.
B) (50 %) from the due tax of the amount that had not been included, if
amount equivalent more than (20 – 50 %) of legally due tax.
C) (100 %) from the due tax of the amount that had not been included,
if amount equivalent more than (50%) of the legally due tax.
Article (138):
The impose fines should be collected in accordance with this act with the
same procedures of tax collections.
Article (139) Reconciliation of violations and fines:
A) The chairman of tax authority or his authorized person of
reconciliation in violations fine mentioned in articles (134/ 137) of this
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act, the including reduction does not exceed 50 % of the fine imposed
and the payment of due tax.
B) The chairman of tax authority or his authorized person of
reconciliation in the reduction of fines imposed under the provisions of
article (135/136) of this act upon the written and justified request of
substantiated of the taxpayer and not be exceed 50 % of fine imposed.
Article (140) A penalty in absence of holding regular accounts:
A) Without prejudice to the penalties set forth in article (141) of this act, ,
In case of absence comply with the taxpayer by regular accounts
holding mandatory hold according to provision of this act, impose a
financial penalty of 100 % from the due tax, and the penalty will be
double when repetition.
B) In case of when taxpayer is exempted from the tax according to
investment act or any other act, impose a penalty not to commit for
regular holding of lump sum amount, and determined by One million
(1000,000) YR refer to the large taxpayers, and three hundred thousand
(300,000) YR refer to mediators taxpayers.
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Chapter Two
Crimes of tax evasion &
Crimes of breach of the public office
Article (141): Crimes of evasion:
A) Punished by imprisonment for three years or penalty not less than
100 % and not more than 150 % from evasive tax and from any year
or part of it, in addition to the payment of tax penalty, and
additional amount every tax payer evaded from whole tax or part of
the tax that came any of the following acts :
1) The Absence of submitting the tax declaration on the time of one
year after proceeding the legal time.
2) Submitting the tax declaration in accordance with the notebooks,
records, accounts or false documents or including data differ from
permanent to him by notebooks, records, accounts or documents
hidden by him.
3) Submitting the tax declaration base on not holding notebooks,
records or accounts, and the authority notices that he has notebooks,
records and regular accounts, and his submitted declaration is
different from what is permanent to him by the notebooks, records,
accounts or documents hidden by him.
4) Introducing any false statement, submitting a false entry or incorrect
statement in any of the document or statement submitted in
accordance with this act.
5) Preparing, saving or permitting by any notebooks, accounts or false
entries or false permitting to be prepared and maintained for
allowing such notebooks, accounts or entries to be faked with the
intent to hide or exclude any income subject to tax under this act, or
any part thereof, with the intent to avoid payment of tax, wholly or
partially, or attempting to obtained an unlawful exemption.
6) Using any false fraud whatever it may be or allow using the same to
avoid payment of tax or reduce the amount by any means.
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7) Introducing the records, notebooks, accounts, documents, forged
documents and fake documents or incorrect data, to evade from the
tax payment wholly or partially.
8) If not saving notebooks, records, accounts and the documents or
execute by damaging completely or partially before the time in the
article (88) of this act.
9) Delivering any incorrect information or data about any matter or
incident that may affect his or any other person’s responsibility
towards payment of tax, or result in the reduction of its amount.
10) Delivering any false written reply to any question or request
address to him for obtaining information or data required under this
act with intent to avoid payment of tax wholly or partially.
11) Concealed activities, professions or part of them submitted to
tax in accordance with the provisions of this act.
B) Doubling specified penalty in paragraph (A) of this article in case of
repetition.
1) Tax evasion is a crime of serious crimes.
2) The authority has a right to publish the names of people who
convicted from tax evasion to pay by judgment became in the
official newspapers.
Article (142): Chartered Accountant:
A) Without prejudice to the responsibility of chartered accountant
according to provisions of this act, shall be punished by imprisonment
not more than three years, or penalty not less than five hundred
thousand (500,000) YR and not exceeding ten million (10,000,000) YR,
any accountant permitted to practicing profession, commits one of the
following acts:
1) Intent the approval of financial statements and disagree the rules and
accounting principles accepted and systems and regulations.
2) Trying to confirm tax declaration and attachments, proved not
including all revenues and submitted amounts to tax in any following
cases:
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• Concealed the knowledge of incidents while carrying out his duty, and
not to disclose the documents which attested by accuracy when exist
disclosure about these necessary incidents orders in order to reflect
these accounts and documents by real activity of taxpayer.
• Concealed the knowledge of incidents while carrying out his duty
relating to any amendments or change in notebooks, accounts, records
or documents, the purpose of this amendment or change leads to
reduce the profits or increase of losses, in order to evade from the tax
payment wholly or partially.
B) Double the penalty, which is specified in paragraph (A) of this article
in case of return or repetition.
C) By the minister on recommendation of committee from authority or
authorized entity, and association of chartered accountants in case of
proving any of violations provided for in paragraph (A) of this article
to any chartered accountant, issuing a decision not to be accept by
authority for accounts auditing and reviewing or confirmed tax
declarations by him for three years later, and issue should be published
in the official newspapers. And issue to form responsibility of the
committee mentioned to decision by the minister based on authority
chairman request.
Article (143): Reconciliation in crimes of tax evasion:
The minister or any authorized person is entitled to conclude
reconciliation in crimes of tax evasion stipulated on this article before
issuance of the court verdict became in the filing of lawsuit by returns
for payment:
A) A due tax, fines and additional amounts in addition of
compensation equivalent to half of the tax amount, which not paid in
stipulated crimes in paragraph (A) of article (141) of this act.
B) Compensation equivalent to half of the amount of penalty imposed
according to the article (142) of this act.
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C) Consequences of reconciliation shall be the dropping of the legal suit
and stoppage of its procedures and elimination of its consequences.
Article (144): procedures of motivation in lawsuit:
A) Without prejudice to the provisions and procedures of entitled tax
assessment when the real evasion according to provisions of paragraph
(B) of this article, assume to public prosecution according to request of
authority chairman, to appeal the lawsuit under the primary tax court
concerning tax evasion crimes.
B) Rights to tax administration after verification of evasion incident by
following procedures.
1) Assessment of entitled tax which is evaded by the taxpayer and
notifying him in accordance with provisions of this act, applies this
assessment the same procedures of objection and rebuttal mentioned in
this act.
2) Request by authority from the prosecution to appeal lawsuit in front of
primary tax court against evaded tax payer, to apply legal penalties
imposed according to this act and applicable acts, coincide with
procedures of entitled tax assessment mentioned in clause (1) from this
paragraph.
3) Not possible for the tax authority to use the procedures mentioned in
clauses (1, 2) from this paragraph unless it has documents that prove the
taxpayer committing the same crime of tax evasion.
C) In case of issuing the order of rebuttal committee by prove part or all
amount entitled tax assessment which is done according to clause (1)
from paragraph (B) of this article and that before issuing the court order
in evasion appeal (Lawsuit), then the tax administration has to make a
request to the court to attach its appeal by entitled tax with the lawsuit
according to provisions of the act.
Article (145): Soldiery liability with the legal person:
In case the evasion crime is committed by legal person, the partner in
charge, the director, the managing director or the chairman of the board
or whoever is responsible of actual management as the case may be,
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shall be responsible, by that commitment to pay a value tax which he
evaded to pay and the penalties and fines owed to him. To be consider
each individual contribute by evasion works and works with the in
charge legal person by solidarity towards any violation to provisions of
this act.
Article (146): Liability of tax payment:
The application of penalty procedures in accordance with this act does
not relieve any person from the liability of paying entitled tax.
Article (147): crimes of prejudicing in public office:
A) Without prejudice to any administrative penalty, punished by
imprisonment not exceeding three years or penalty not less than one
million (1,000,000) YR and not exceeding ten million (10,000,000)YR, any
staff of tax administration is concerned with identification, assessment
and tax collection at prove to committing any following crimes:
1) Utilized his job authority to threaten and blackmailing any taxpayer to
get something for himself or for others.
2) Utilized his job authority to get the benefit from the taxpayer for
himself or others by opposing the law.
3) Utilized his job authority to delay the rules and the applicable tax
regulations, or reject to implement the decisions and the applicable
judgment of provisions.
B) Punished by imprisonment not less than three months or penalty not
less than one hundred thousand (100,000) YR and not exceeding one
million (1,000,000) YR and any employee of the tax administration,
intend to access for establishment for any tax payer by the intent to do
tasks including identification, accounting, calculating data or tax
collection, without being formal charged with carrying out that tasks or
any of them and executed the job at unofficial time for the
establishment.
C) Without prejudice to any strict punishment in punishments law and
without prejudice to tax evasion provisions, punished by imprisonment
not less than one year and not to exceed for five years or any employee
of tax administration received bribery in cash or in kind of hiding
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amounts submitting to tax or performed a work or referring to violate
his job work, and applies the same punishment to briber (taxpayer) and
the mediator between the employee and taxpayer.
Part Seven
Collection & Attachment
Article (148): Tax Payment:
A) All tax payers should pay the tax in accordance with shown
declarations or approval on the assessment or entitled amounts owed to
them, including assessment tax on small establishment on the specific
dates. After deducting the amounts paid according to the collection
system under the account of income taxes in the authority to the account
with the central bank or one of the branches in the municipality capital
and governorates or official authorities or interest to the treasury as
determined by the regulation.
B) Every employer is responsible for payment salary, wage, allowance or
bonus or any un exempted amount of tax, should be deducted when the
assessed tax is paid, the employer has to deposit the tax monthly to the
authority account in the central bank or in one of the braches or any
agencies belong to the treasury, If any employer is delayed in deducting
or depositing the due tax for the months he paid, the authority can
obligate him to pay the tax without prejudice in fines or penalties set is
this law.
Article (149): Dates for tax payment and recovery:
A) The due tax should be collected in accordance with the basis of final
tax assessment within twenty days of notification of tax payment
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B) In the case of the tax payer paid more than the amount of his entitled
taxes, he has a right to recover his amount all or some of taxes which
he paid & The authorities has t o return his taxes amounts from
collected revenues within 40 days from the date of application when
they receive from applicant, unless the authority has to deduct from
his coming due taxes.
C) Collection of penalties and fines as if tax debt.
D) Executive regulations shall specify application form of tax recovery,
In all cases the application form recovery must be submitted within
five years from the date of excess tax payment, and the amounts
should be recover from the collected revenues, In accordance with
the procedures and rules set by the regulations.
Article (150): Tax Installment:
The chairman of tax authority has the right to approve the entitled tax
installment or part thereof upon written request and justification of the
taxpayer, showing the reasons which faced him in paying the tax within
the statutory period.
Article (151: installment schedule:
A) The chairman of tax authority or his authorized person have the
right to accept or reject the request of tax installment submitted to him
under Article (150) of this act,
B) Installing tax should be carried out in accordance with scheduling done
by tax authority, and signed by the taxpayer committed to the
implementation without prejudice of dates and amounts mentioned in
this schedule.
C) Installing tax is installed in equal with same period of dues, in all
cases, shall not exceed three years and installment cannot be re
scheduled.
D) In case of taxpayers prejudicing with scheduling installment or in
the case of the declaration of bankruptcy or liquidation of business, the
authority should take action to collect the remaining tax in accordance
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with the provisions of this act and the collecting of public funds and the
applicable laws.
E) In case of delaying payment of the entitled installment, apply the
provisions at article (152) of this act, and is calculated by the legal period
specified on the installment amounts from the entitled date of payment,
in accordance with the provisions of this act and the collection of public
funds and the applicable laws.
F) Excluded the provisions of the installment tax stipulated in this article,
the collected taxes at source such as salaries and wages tax and the
amounts previously collected from a third party under the income tax
account.
G) In the case of refusal of the authority chairman to installment
request, the taxpayer is not entitled to apply a new tax installment,
unless the application contains the new justifications of the causes and
circumstances to justify reconsideration.
H) The regulations shall specify the applied procedures and forms of the
installment applications.
Article (152): Increment Amounts:
A) If the tax is not paid on the defined date in accordance with the
provisions of this act, there will be an additional amount equal to 1.5%
(One and half %) of the unpaid amount at each month of delay.
B) The increment amounts shall be collected in the same procedures of tax
collection, and the added amount under this article is not part of the tax.
Article (153): attachment writ:
A) The chairman of the authority or any authorized person is entitled to
request the court to issue an immediate temporary writ on the taxable
persons properties including the amounts entitled from others without
prior notice in any following cases:
1) If there are serious reasons expected with the tax payer to smuggle and
hide his funds, including relinquishment to others.
2) When there is no permanent residence for the tax in the country.
3) In the presence of the tenant who is leasing the property and when the
landlord rejects or delay to pay his tax payment from his onetime
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property tax, If the tenant has any confession under his liability for the
landlord inform within 15 days of attachment.
4) When the tax authority notices on the serious way that the public
treasury rights in the loss.
B) To be consider the attach funds under the court order safely attach not
possible to disposal, until release the attachment by the court order
which issued the attachment.
C) By the authority (attachment applicant) shall appeal a lawsuit to
clarify the rightness of the attachment against the attached party and the
attaching party and to assess the entitled tax of the attached taxpayer
,within thirty days from date of attachment notice
Article (154): Writ of attachment:
When the debt tax happen to final and the payer delayed to pay the tax
payment after the passing notice period of payment, in this case the
court has a right behalf of request of the chairman or any authorized
person issue the notice for seize the property of tax at the equivalent
amount of debt tax of the payer, including what they have in his
properties with others such as cash and stocks etc which entitling in
present or & future.
Article (155): Implementation of the attachment procedures:
To be progress the procedures of attach and sale, according to the
specifying procedures in the effective regulations to assume by the court
direction to execute the attachment.
Article (156): The right debt tax deduction:
The minister based on justified request from the chairman of authority
can deduct from the rights of the public legal people at the ministry of
finance by arranging tax ,fines, penalties or other amounts legal
determine, to assume execution by the central bank, it’s not possible for
commercial banks to deduct except by court order.
Article (157): Complementary of regulations:
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To get the collection of tax and fines and entitled increment amounts
according to the specified procedures in this law and in the act of
collection of public funds and the regulations.
Article (158): Rules of Adding and deducting:
To the authority to collect, the tax amounts under the tax account, and
determine the percentages and procedures of collection according to the
limited executive list to this law.
Article (159): Privilege of tax debt:
A) The tax debt is a preferential debt that must be not settled to the tax
Authority without the need for demand.
B) Payments of entitled amounts to the authority to meet the
commitments of the tax payer come in order as the following
1) Administrative and legal penalties.
2) Penalties of delay payment.
3) Debt of entitled taxes.
Section three
General and Transitional Provisions
Part One
Transitional provisions
Article (160): Cancellation of tax exemption mentioned in any applicable law:
A) Canceling the tax exemptions mentioned in the rules with taking in
account of provisions and following rules:
1) Actual investment projects obtain on tax exemption according to
investment act no. (22) In Year of 2002 continually effective that
exemption before issuing this act, until end of specify period for that
exemption fulfill this projects settlement by other due taxes, which are
not cover by that exemption.
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2) Projects of investment registered according to investment act no (22) in
year of 2002 and did not engage initiate activity and production until
issuing the act, by start in condition of initiate engagement and
production in extreme time period of two years from date of issue
3) By the coordination between the tax authority and Investment
authority and exchange data and information and working on
performance and implementation of direction and rules stated in clauses
(1 & 2) from paragraph(A) of this article which not face with the acts
which having a relation in investment act and this law.
B) To be canceling all exemption taxes specify in the central bank and
issuing other banks and submitted to all the banks & exchange in the
republic for taxes according to this act.
Article (161): Ordinary exclusions:
A) To assume and image of exclusions sue of the general primary finances
in the rest of republic governorates -where there is no court taxes until
issuing this act - also branches of general finance and also commercial
branches in the courts of appeal and commercial departments by
supreme court compare and separation in tax issues until establishing
and forming primary tax court in the rest of governorates and
establishing tax branches appellate by the municipality capital and
governorates and tax department in supreme court according to this
act.
B) Devolve the former rebuttal committee according to this law, pending
issues in front of the committee according to the last act no. (31) In year
of 91 regarding income tax and amendments, while except attach act to
issue the decree.
Part Two
General Provisions,
Article (162): Legal Approval:
When come across end of the legal time to submitting a declaration or
protest a holiday, or legal holiday, so that the declaration or the protest
shall be submitting on the first working day officially.
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Article (163): foreign leaving cases:
Any foreigner taxpayer wishes to leave the republic permanently when
before his departure shall obtain a certificate from the tax authority
testifying for the settlement of all dues according to provisions of this
law, otherwise submit adequate guarantees, which are accepting by the
authority.
Article (164): Duality:
To avoid the tax duality or repetition, the executive regulations shall
specify the details of the procedures, which shall prevent tax duality in
accordance with the provisions of this law.
Article (165) Share of penalty:
The public treasury will receive seventy percent (70%) of penalties and
increment amounts collected by the authority under the provisions of
this act. The remainder will be allocate to face the supervisory executive
actions including costs of survey, assessment and collection of income
tax, as defined in the executive regulations.
Article (166): The status of judicial officers:
The tax authority personnel have to be duly defined with the status of
judicial officers by issuing of the general attorney according to the
minister request.
Article (167):
The mentioned information in the declarations submitted by taxpayers in
accordance with this act is not the presumption of evidence on the
taxpayer income for the previous years for the implementation of this
act.
Article (168):
The chairman of tax authority or authorized person has a right to
conciliation of the reduction or canceling in delayed penalties and
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additional imposed amounts in accordance with this act no. (31) in year
of 1991 and amendments with the condition the taxpayers have to
perform the entitled tax commitments legally.
Article (169) Regulation issue:
The minister can issue based on the chairman of the tax authority
Request.
A) The executive regulation of this act within six months from effective
date.
B) Regulation and decrees implementing the provision of this act.
Article (170): Cancellation of previous act:
Income tax law no. (31) In year of 1991 and amendments must be
superseded.
Article (171): The Effective Implementation:
This act shall came into effect from the date of 31/12/2010 and should
be published in the official Gazette, and under this effective scope of
provisions for this act on profits, incomes and actual revenues in the tax
year 2010 of submitted tax of commercial & industrial profits and tax on
non industrial an non commercial professions, and the property
proceed.
Issued at the presidency of the republic – Sana’a
On 19th Ramadan 1431 A.H.
Corresponding to 29th August 2010.
Ali Abdullah Saleh
President of The Republic